The Immigrant Innovation Boost

Via The New Economist, there is a research paper, by Jennifer Hunt, which shows a link between an vibrant and educated immigrant student population and innovation in the US. A couple of excerpts from the paper:

'Although there is a large literature studying the impact of immigration on the host country, this literature is more focused on potential costs than potential benefits. One reason for this is that the biggest potential benefits are harder to quantify than potential costs. Amongst these potential benefits are higher productivity, if there are increasing returns to scale in production; the achievement of critical mass in specialized areas of research, development and production; spillover effects of skilled workers through externalities and production complementarities, including of the O-ring variety; increased entrepreneurship and increased innovation in science, the arts and other fields. Some tantalizing facts hint at the possible importance of these effects for the United States.'

'Twenty-six percent of U.S.-based Nobel Prize recipients from 1990-2000 were immigrants (Peri 2007), twenty-nine percent of U.S.-based U.S. patent holders had non-Anglophone names in 2000-2004 (Kerr 2007), and twenty-five percent of founders of public venture-backed U.S. companies in 1990-2005 were immigrants (Anderson and Platzer n.d.), compared to a foreign-born population of 12% in 2000.'

'While in the short run there is some evidence that immigrants crowd out natives, either deterring natives from moving to states with skilled immigrants or deterring them from working as a scientist or engineer, in the long run there is no evidence of such crowd-out, but rather a suggestion that skilled immigrants may attract skilled natives. This is consistent with Borjas (2006), who finds that immigrants do not crowd out natives as a whole from graduate school. The absence of crowd-out means that my estimates of the benefits of immigrants are not offset by reductions in native contributions to innovation.'

Below is a chart from the report, which shows the top 4 states with the most patents. Two things these states share are a great number of quality colleges and universities and a large and diverse immigrant population. The odd thing is that aside from Texas, all the other are high tax states.

Source:
'How Much Does Immigration Boost Innovation?', by Jennifer Hunt