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Research looks at who gains most from high-skilled foreign workers

March 29, 2017

Research looks at who gains most from high-skilled foreign workers

Topic: Research

Foreign computer scientists granted H-1B visas to work in the United States during the IT boom of the 1990s had a significant impact on workers, consumers and tech companies.

Researchers John Bound and Nicolas Morales of the University of Michigan and Gaurav Khanna of the University of California, San Diego and the Center for Global Development studied the impact on the U.S. economy of recruiting these foreign computer scientists.

They selected the time period of 1994-2001, which marked the rise of e-commerce and a growing need for technology workers. The H-1B visa allowed U.S. companies to temporarily employ foreign workers in specialized occupations. The number of these visas granted annually is capped by the federal government.

Bound, Morales and Khanna found that the high-skilled immigrants had a positive effect on innovation, increased the overall welfare of Americans and boosted profits substantially for firms in the IT sector.

On the flip side, the influx of immigrants dampened job prospects and wages for U.S. computer scientists. U.S. workers switched to other professions lowering the employment of domestic computer scientists by 6.1 percent to 10.8 percent. Based on their model, wages would have been 2.6 percent to 5.1 percent higher in 2001.

"As long as the demand curve for high-skill workers is downward sloping, the influx of foreign, high-skilled workers will both crowd out and lower the wages of U.S. high-skill workers," said Bound, professor of economics.

Immigration also lowered prices and raised the output of IT goods by between 1.9 percent and 2.5 percent, thus benefiting consumers. Such immigration also had a big impact on the tech industry's bottom line.

"Firms in the IT sector also earned substantially higher profits thanks to immigration," said Morales, an economics doctoral student.


Rork Kuick
on 3/30/17 at 8:07 am

I like getting more smart well-educated people into our country, even though it does have some downsides for my wallet. But I worry more that lower wages for science and tech workers means our young people are less inclined to study these subjects and exercise their powers of concentration. I wanted to be a scientist because they were respected and admired when I was young, but these days the message that good programmers or engineers make great wages might be more effective.
PS: A link to the paper would have been convenient.

Murali Mani
on 3/30/17 at 11:22 am

I tend to agree with the last 2 paragraphs.. Having immigrants (and diversity in general) brings out a better product and hence our products enjoy a larger global market share, and brings more revenue and jobs. So how can we claim that immigration has a negative influence on the wallet??

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