STEMWorkers, H1B Visas and Productivity in US Cities

Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are the fundamental inputs in scientific innovation and technological adoption. Innovation and technological adoption are, in turn, the main drivers of productivity growth in the U.S. In this paper we identify STEM workers in the U.S. and we look at the effect of their growth on the wages and employment of college and non-college educated labor in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogenous increase in STEM workers across U.S. cities, we use the dependence of each city on foreign-born STEM workers in 1980 (or 1970) and exploit the introduction and variation (over time and across nationalities) of the H-1B visa program, which expanded access to U.S. labor markets for foreign-born college-educated (mainly STEM) workers. We find that H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to both STEM and non-STEM college-educated natives. Non-college educated show no significant wage or employment effect. We also find evidence that STEM workers caused cities to experience higher housing prices for college graduates, increased specialization in high human capital sectors, and a rise in the concentration of natives in cognitive occupations. The magnitudes of these estimates imply that STEM workers contributed significantly to total factor productivity growth in the U.S. and across cities and — to a lesser extent — to the growth in skill-bias between 1990 and 2010.