Working Paper: NBER ID: w23153
Authors: John Bound; Gaurav Khanna; Nicolas Morales
Abstract: Over the 1990s, the share of foreigners entering the US high-skill workforce grew rapidly. This migration potentially had a significant effect on US workers, consumers and firms. To study these effects, we construct a general equilibrium model of the US economy and calibrate it using data from 1994 to 2001. Built into the model are positive effects high skilled immigrants have on innovation. Counterfactual simulations based on our model suggest that immigration increased the overall welfare of US natives, and had significant distributional consequences. In the absence of immigration, wages for US computer scientists would have been 2.6% to 5.1% higher and employment in computer science for US workers would have been 6.1% to 10.8% higher in 2001. On the other hand, complements in production benefited substantially from immigration, and immigration also lowered prices and raised the output of IT goods by between 1.9% and 2.5%, thus benefiting consumers. Finally, firms in the IT sector also earned substantially higher profits due to immigration.
Keywords: H1B program; high-skilled immigration; US economy; labor market outcomes; productivity
JEL Codes: J23; J24; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high-skilled immigration (J61) | overall welfare of US natives (I39) |
| H1B visa holders (K37) | wages for US computer scientists (J31) |
| H1B visa holders (K37) | employment in computer science for US workers (J68) |
| H1B visa holders (K37) | output of IT goods (L63) |
| H1B visa holders (K37) | profits in the IT sector (L86) |
| high-skilled immigration (J61) | innovation (O35) |
| foreign computer scientists (F22) | native wages (J15) |