The recent appointment of venture capitalist Sriram Krishnan, an Elon Musk ally, to the incoming Trump administration sparked controversy on X (formerly Twitter) among MAGA supporters. The conflict arose from Krishnan’s past support for removing green card country caps for skilled immigrants, a position aligned with Silicon Valley but controversial among some Trump supporters.
Amid this debate, it’s a good time to review a bit of the economic research on immigration and innovation, where one finds the linkage to be strong. In the 2022 study “The Contribution of High-Skilled Immigrants to Innovation in the United States,” researchers connected Social Security numbers and patent records, finding that immigrant inventors file more patents, receive more citations, and create more valuable innovations than native-born inventors over their careers. They also help spread ideas internationally by using foreign technologies and working with overseas collaborators.
And talk about a win-win scenario: When immigrant and native inventors work together, they boost each other’s productivity substantially. Though immigrants represent only 16 percent of US inventors, they’ve generated 30 percent of all US innovation since 1976. Most of this impact comes from how they improve their native colleagues’ work, rather than just their direct contributions.
Another paper showing the value of immigration—as well as how connectivity is fundamental to pro-growth economics—is the recent NBER working paper “The Contribution of Foreign Master’s Students to US Start-Ups,” which looks at how foreign-born Master’s degree graduates affect startup creation in the US. Using data from 1999–2020, researchers tracked how many startups were founded by different graduating classes. They found that for every 10 percent increase in foreign students in a Master’s program, that class created 0.4 more startups. By analyzing founders’ names to identify their likely origins, they discovered that 30–45 percent of this increase came from foreign students inspiring and enabling their American classmates to start companies, rather than just launching companies themselves.
The paper also has this nice bit that reminds us of why the American higher education system is so valuable to the American economy:
A large share of innovative US entrepreneurs hold a graduate degree from U.S. Universities, many of whom are world leaders in technology, science, and business. These institutions are fundamental generators of human capital and innovation, as their graduates translate their talents into creativity, innovation, and new firms generating value-added, productivity growth, and jobs for the US economy. In addition, US universities regularly attract highly talented people from all over the world, especially in many of their graduate programs, channeling them into leadership, managerial, and entrepreneurial roles
None of this, of course, means the US immigration system couldn’t use significant reform. The current visa system’s combination of inflexible caps, arbitrary distribution methods, and burdensome bureaucracy is hardly optimal. One interesting suggestion for a fix: Visa auctions that offer a market-driven alternative to government-controlled immigration. Such a system would allow employers to bid for workers based on actual economic value rather than arbitrary criteria, directing visas to the highest-skilled immigrants.