The Often-Overlooked Truth About Immigration

Everyone wants to be on the side of the small-business person—and to make the opposition look as if it is against the average entrepreneur. Barack Obama said in his DNC speech that "we measure the strength of our economy...by whether someone with a good idea can take a risk and start a new business." Then John McCain said in his nominating speech that Obama's economic plan "would force small businesses to cut jobs."

But wait a minute—there's actually a policy that promotes more entrepreneurial innovation than anything either candidate talked about in their speeches. What's more, it's actually a bipartisan issue!

A new paper from the NBER, written by Jennifer Hunt of McGill and Marjolaine Gauthier-Loiselle of Princeton, takes a comprehensive look at how immigrants are disproportionately greater contributors to technological innovation than native-born Americans. Here's a summary of the results:

These data imply that a one percentage point rise in the share of immigrant college graduates in the population increases patents per capita by 6%. This could be an overestimate of immigration's benefit if immigrant inventors crowd out native inventors, or an underestimate if immigrants have positive spill-overs on inventors. Using a 1950-2000 state panel, we show that natives are not crowded out by immigrants, and that immigrants do have positive spill-overs, resulting in an increase in patents per capita of about 15% in response to a one percentage point increase in immigrant college graduates.

It's true that most of the immigrants contributing so much to innovation are coming from the worlds of science and engineering, not business. But someone has to commercialize a patented technology, so the more patents coming out of the United States, the better for American entrepreneurs. It's funny (and somewhat disturbing) that many people in the United States see immigration as an issue about foreign competitors taking jobs from Americans. This study suggests that's backward. If we want to keep job-creating innovation in the United States, we should let in as many foreigners as we can.

Both Obama and McCain have supported pro-immigrant policies, especially for highly skilled immigrants. Let's hope that whoever takes office will work to convince Americans that immigration is a job creator, not a job killer.