The big debate about immigration and the U.S. economy usually focuses on whether overseas workers might hurt American job seekers. However, in a new essay, Wharton management professor Britta Glennon looks at the benefits of high-skilled immigration.
Analyzing an array of studies on immigration and the U.S. economy, she finds that immigrants aren’t taking jobs away from American-born skilled workers. In fact, because skilled immigrants often start businesses, they create jobs instead. One study indicates that immigrants are some 80 percent more likely to establish businesses compared to U.S.-born citizens.
Glennon’s article, published in the Journal of Economic Perspectives, notes that hiring skilled overseas workers can make big companies more productive and innovative. When businesses perform better and invest more because of high-skilled immigrants, they usually end up hiring more people, which is good for the economy.
“I have been frustrated by the degree to which the public-policy debate over immigration has tended to ignore the role of firms and to assume that the impact of immigration policy is constrained within national borders,” said Glennon. “The essay tries to change that by showing the significance of companies in the policy debate and illustrating how a change in immigration policy in one country might affect other countries. There is a national competitiveness angle here that is often overlooked.”
Immigrants frequently bring new ideas and technology that can make businesses more efficient and increase wages overall. For instance, 59 percent of artificial intelligence PhD graduates hired by U.S. companies are immigrants. And immigrants help multi-national companies perform better when exporting their products and services overseas, Glennon notes.
Given these benefits, many countries share a common goal of attracting and choosing the most talented immigrants. The U.S. is one of the primary destinations for immigrants — in 2020, the country attracted 18 percent of the world’s overseas workers. In many cases, the demand for employment-based green cards from companies exceeds the per-country limit, prolonging wait times for permanent residency. (China, India, Mexico, and the Philippines are notable examples). For Indian citizens aiming to work in the U.S., these wait times are currently projected to exceed 100 years.
Glennon finds that these issues shape the decisions and outcomes of U.S. corporations. When the availability of skilled immigrants changes, firms may adjust their production methods, expand their operations, or relocate skilled workers overseas. “Immigrants have large positive benefits for firm outcomes, particularly for startups,” she says.
In a global economy, businesses in countries that restrict the inflow of skilled immigrants might not do as well compared to those in countries with more open policies, Glennon argues. Ultimately, she calls for more sophisticated models of immigration that consider how businesses make choices and adapt to changes in the availability of skilled immigrants. In concluding, Glennon writes: “Countries that hamstring their own firms with restrictive skilled immigration policies may damage their own national competitiveness by shifting investment and innovation abroad.”
Published as “The Impact of High-Skilled Immigrants” in the Fall/Winter 2024 issue of Wharton Magazine.
