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Foreign STEM Workers and Native Wages and Employment in U.S. Cities

Author

Listed:
  • Giovanni Peri
  • Kevin Y. Shih
  • Chad Sparber

Abstract

Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are fundamental inputs in scientific innovation and technological adoption, the main drivers of productivity growth in the U.S. In this paper we identify the effect of STEM worker growth on the wages and employment of college and non-college educated native workers in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogeneous increase in STEM workers across U.S. cities, we use the distribution of foreign-born STEM workers in 1980 and exploit the introduction and variation of the H-1B visa program granting entry to 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 college educated natives. Wage increases for non-college educated natives are smaller but still significant. We do not find significant effects on employment. We also find that STEM workers increased housing rents for college graduates, which eroded part of their wage gains. Together, these results imply a significant effect of foreign STEM on total factor productivity growth in the average US city between 1990 and 2010.

Suggested Citation

  • Giovanni Peri & Kevin Y. Shih & Chad Sparber, 2014. "Foreign STEM Workers and Native Wages and Employment in U.S. Cities," NBER Working Papers 20093, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20093
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    References listed on IDEAS

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    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
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    4. Giovanni Peri & Chad Sparber, 2016. "Task Specialization, Immigration, and Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 3, pages 81-115 World Scientific Publishing Co. Pte. Ltd..
    5. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    6. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, Elsevier.
    7. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
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    9. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    10. Antonio Ciccone & Giovanni Peri, 2005. "Long-Run Substitutability Between More and Less Educated Workers: Evidence from U.S. States, 1950-1990," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 652-663, November.
    11. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
    12. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, July.
    13. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    14. Depew, Briggs & Norlander, Peter & Sorensen, Todd A., 2013. "Flight of the H-1B: Inter-Firm Mobility and Return Migration Patterns for Skilled Guest Workers," IZA Discussion Papers 7456, Institute for the Study of Labor (IZA).
    15. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
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    Citations

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    Cited by:

    1. Andreas Beerli & Ronald Indergand, 2014. "Which Factors Drive the Skill-Mix of Migrants in the Long-Run?," Diskussionsschriften dp1501, Universitaet Bern, Departement Volkswirtschaft.
    2. David Card & Giovanni Peri, 2016. "Immigration Economics by George J. Borjas: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1333-1349, December.
    3. repec:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-017-0064-4 is not listed on IDEAS
    4. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, Elsevier.
    5. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    6. Giovanni Peri & Kevin Shih & Chad Sparber, 2016. "STEM Workers, H-1B Visas, and Productivity in US Cities," World Scientific Book Chapters,in: The Economics of International Migration, chapter 9, pages 277-307 World Scientific Publishing Co. Pte. Ltd..
    7. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    8. John Bound & Gaurav Khanna & Nicolas Morales, 2017. "Understanding the Economic Impact of the H-1B Program on the United States," NBER Chapters,in: High-Skilled Migration to the United States and its Economic Consequences, pages 109-175 National Bureau of Economic Research, Inc.
    9. Malakhov, Vladimir & Simon, Mark, 2017. "Migration Policy in the Conditions of Economic Turbulence: The Experience of the European Union and the Prospects of Russia," Working Papers 051723, Russian Presidential Academy of National Economy and Public Administration.
    10. Assaf Razin, 2017. "Globalization Policies and Israel’s Brain Drain," NBER Working Papers 23251, National Bureau of Economic Research, Inc.
    11. John Bound & Gaurav Khanna & Nicolas Morales, 2017. "Understanding the Economic Impact of the H-1B Program on the United States," NBER Chapters,in: High-Skilled Migration to the United States and its Economic Consequences, pages 109-175 National Bureau of Economic Research, Inc.
    12. Gunther Tichy, 2015. "Protecting social inclusion and mobility in a low growth scenario," WWWforEurope Working Papers series 100, WWWforEurope.
    13. Andreas Beerli & Giovanni Peri, 2015. "The Labor Market Effects of Opening the Border: New Evidence from Switzerland," NBER Working Papers 21319, National Bureau of Economic Research, Inc.
    14. John V. Winters, 2015. "Do higher levels of education and skills in an area benefit wider society?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 130-130, March.
    15. repec:nbr:nberch:14031 is not listed on IDEAS
    16. Brunow, Stephan & Birkeneder, Antonia & Rodriguez-Pose, Andrés, 2017. "Creative and science oriented employees and firm innovation : a key for smarter cities?," IAB Discussion Paper 201724, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Ivan Etzo & Carla Massidda & Paolo Mattana & Romano Piras, 2017. "The impact of immigration on output and its components: a sectoral analysis for Italy at regional level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 533-564, December.
    18. Razin, Assaf, 2017. "Global Skill-Based Immigration Policies and Israel's Brain Drain," CEPR Discussion Papers 11903, C.E.P.R. Discussion Papers.
    19. Winters, John V., 2014. "Foreign and Native-Born STEM Graduates and Innovation Intensity in the United States," IZA Discussion Papers 8575, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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