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Immigration, Innovation, and Wages in the U.S.

Let us talk about immigration effects on innovation and wages

S.J. Nam 11 min read
Immigration, Innovation, and Wages in the U.S.

I came to the United States from South Korea chasing the same thing millions before me chased: the idea that a person could arrive with little and build something. Decades later, immigration is once again the loudest argument in American life. One camp insists newcomers take jobs and drag down wages. Another insists they bring energy, skills, and ideas that push the whole economy forward. Both sides speak with total confidence. So it's worth asking a quieter question: what does the actual research say?

This essay walks through the evidence on how immigration affects wages and innovation in the United States — not as slogans, but as findings, with names, years, and numbers attached. Along the way you'll see why serious economists, looking at the same phenomenon, sometimes reach opposite conclusions. That disagreement isn't noise to be smoothed over. It's the most honest part of the story.

Why Immigration Sits at the Center of Growth

When I was in my Ph.D. program, my classmates came from Beijing, Bangalore, Lagos, Bogotá, and Seoul. That wasn't unusual. Immigrants are roughly 14% of the U.S. population but a far larger slice of the people doing science and engineering. Silicon Valley is the obvious exhibit — immigrant founders and co-founders shaped Google, Intel, Tesla, and countless startups — but the pattern runs deeper than any one region.

The reason immigration matters so much for growth is that it does two things at once. It expands the labor force, and it expands the stock of ideas. Living standards over the long run rise mostly through productivity — output per worker — and productivity rises mostly through innovation. So if immigration touches innovation, it touches the deepest engine of prosperity, not just the size of the workforce.

But that same power raises hard questions:

  • Do immigrants push down wages for native-born workers?
  • Do they "take" jobs, or create them?
  • And how do you even measure something as slippery as "innovation"?

Let's take them in order.

Immigration and Wages: A Genuine Scientific Fight

The natural experiment that started it all

The most famous piece of evidence in this entire debate is an accident of Cold War history. In 1980, Fidel Castro briefly opened the port of Mariel, and about 125,000 Cubans left for Florida in a matter of months. David Card, then at Princeton, saw a natural experiment: a sudden, unplanned surge in Miami's low-skilled labor supply. In his 1990 study in the Industrial and Labor Relations Review, Card found that this roughly 7% jump in Miami's labor force produced essentially no measurable drop in the wages or employment of less-skilled workers — including the Cubans who had arrived earlier. The local economy simply absorbed the shock.

For years the "Mariel result" was treated as close to settled. Then George Borjas of Harvard reopened it. In a 2017 reappraisal, also in the Industrial and Labor Relations Review, Borjas narrowed the lens to a specific group — non-Hispanic men without a high school diploma — and reported large wage declines in Miami after the boatlift. That paper detonated a methodological brawl, because narrowing the sample that far left him analyzing only a handful of workers per year in the survey data, making the estimate extremely fragile. Giovanni Peri and Vasil Yasenov re-ran the analysis with a "synthetic control" of comparison cities and found no negative wage effect. The same 125,000 people; opposite conclusions. As surveys of the refugee-wage literature at CEPR and Bruegel emphasize, the balance of studies on sudden refugee inflows finds modest or no harm to native workers — but the fight over how to slice the data never fully ended.

Local streets versus national ledgers

The Mariel quarrel is really a proxy for a deeper split in method.

The local labor market approach — Card's — compares cities with more and less immigration. It tends to find small effects, because cities adjust: firms expand, consumers spend more, and some native workers move to other towns, spreading any shock across the whole country.

The national skill-cell approach — Borjas's signature method — instead groups workers nationwide by education and experience and asks what happens within each group. Looking through that lens, Borjas has long argued that immigration meaningfully lowers wages for the least-educated natives, precisely because you can't "escape" a national labor supply shock by moving to Denver.

Neither approach is dishonest. They're measuring different things, and the answer genuinely depends on which margin of adjustment you think dominates.

Substitutes or complements?

A third strand reframes the whole question. Peri and Gianmarco Ottaviano, in a 2012 paper in the Journal of the European Economic Association, argued that immigrants and natives with similar schooling are imperfect substitutes — they tend to do different tasks. Immigrants often specialize in manual and physical work; natives shift toward communication- and language-intensive roles. Once you allow for that, their model estimated that immigration over 1990–2006 slightly raised the average wage of native-born workers over the long run, while the sharpest downward pressure fell not on natives but on earlier immigrants, who compete most directly with new arrivals.

The picture that emerges is less zero-sum than the cable-news version. When the National Academies of Sciences, Engineering, and Medicine assembled a panel of economists across the ideological spectrum for its 2016 report The Economic and Fiscal Consequences of Immigration, the consensus was that immigration has little to no effect on the wages and employment of native-born workers over the long run — with whatever small negative pressure exists concentrated among prior immigrants and native workers without a high school degree. A 2024 NBER working paper revisiting U.S. wages and employment reached similarly reassuring conclusions about the aggregate effect.

Immigration and Innovation: The Newer, Bigger Story

If wages are the old battlefield, innovation is the frontier — and here the evidence tilts more decisively in one direction.

Patents as a window on ideas

Economists often proxy innovation with patents, imperfect but countable. Jennifer Hunt and Marjolaine Gauthier-Loiselle, in work circulated through the NBER in 2008–2010, found that immigrants patent at roughly twice the rate of native-born Americans — not because of any innate difference, but because they cluster in science and engineering degrees. Their headline estimate: a one-percentage-point rise in the share of immigrant college graduates in the population lifted patents per capita by 9 to 18%, once the spillovers onto native inventors were counted. Immigrants, in other words, don't just add to the research pile; they appear to enlarge it for everyone.

The visa spigot

Because so much skilled migration flows through one channel, the H-1B visa has become a natural laboratory. William Kerr and William Lincoln, in a 2010 study later published in the Journal of Labor Economics, exploited the sharp year-to-year swings in the H-1B cap. When admissions rose, invention by immigrant scientists and engineers — especially Indian and Chinese inventors in computing — rose with it, lifting total patenting. Crucially, they found little evidence that this crowded out native inventors.

That said, the trade-off critics raise is real: the same visa program that fuels patents can, in specific firms and occupations, hold down pay for native tech workers. The honest summary is that the innovation gains and the localized wage concerns are both true, and policy is the act of weighing them.

History as evidence

One of the most striking studies looks backward. Petra Moser, Alessandra Voena, and Fabian Waldinger, writing in the American Economic Review in 2014, traced the German-Jewish chemists and physicists who fled Nazi Germany after 1933 and landed in American universities. U.S. patenting in the specific research fields those émigrés brought with them jumped by about 31%. A political catastrophe in Europe became a permanent upgrade to American invention — a reminder that where talent lands, ideas follow.

Founders, not just workers

Immigrants also start companies at outsized rates. The American Immigration Council's 2025 analysis found that nearly half of Fortune 500 companies were founded by immigrants or their children, together generating trillions of dollars in annual revenue and employing millions. The upstream research is equally telling: William Kerr's broader body of work on global talent documents that the foreign-born, though a minority of U.S. inventors, account for a strikingly large share of patents and of the highest-cited breakthroughs.

Why Careful People Still Disagree

If you've read this far and feel the evidence pulling in two directions, that's appropriate — and the reasons are structural.

Geography of measurement. Local studies (Card) let adjustment happen and tend to find little; national studies (Borjas) hold the country fixed and tend to find more. The gap between them is a gap in assumptions about mobility, not just data.

Time horizon. In the short run, a fast inflow can nudge some wages down before firms and capital respond. Over years, business creation and complementary hiring tend to offset it. Snapshots and time-lapses tell different stories.

What counts as innovation. Patents, scientific publications, and new firms each capture a different sliver of "innovation," so studies that measure different things will, unsurprisingly, differ.

Recognizing these fault lines is what separates evidence from advocacy. The disagreements are about method, not about whether immigrants are people worth having.

Growing the Pie, Not Just Slicing It

Step back and the deepest finding is this: immigration's most important effect may not be on how the existing pie is divided, but on how fast the pie grows. Michael Clemens captured the scale in his 2011 essay "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?", estimating that removing barriers to labor mobility could raise global output by an amount on the order of 50 to 150% of world GDP — dwarfing the gains from freeing up trade or capital. Those are theoretical upper bounds, not policy proposals. But they signal that the stakes of who moves where are enormous, and that innovation-through-migration is a growth story, not merely a labor-supply story.

The Human Side

It's easy to disappear into models. But every coefficient is a person:

  • The nurse from Manila steadying an understaffed night shift.
  • The engineer from Chennai whose patent ends up in a billion pockets.
  • The farmworker from Michoacán who keeps produce cheap and shelves full.
  • The founder whose company doesn't exist yet, because she hasn't arrived.

I recognize each of them, because in one version of the story, I was one of them.

What Policymakers Should Take Away

  1. Wage fears are largely overstated. The best evidence — Card, Peri, the National Academies panel — points to small or negligible effects on native wages overall, with any pressure concentrated among earlier immigrants.

  2. The innovation gains are large and well-documented. Hunt and Gauthier-Loiselle, Kerr and Lincoln, and Moser and colleagues all point the same way. Choking off skilled immigration risks slowing the very engine of American technological leadership.

  3. Both ends of the skill spectrum matter. The economy leans on Ph.D. inventors and on the workers who keep hospitals, farms, and construction sites running.

  4. Design is everything. Whether the country expands high-skilled visas, smooths paths to legal status, or does neither will decide how much of this upside it actually captures.

America's Quiet Advantage

The evidence, taken whole, is hard to wave away. Immigration feeds the day-to-day labor force and the rare, compounding leaps in invention that separate rich countries from stagnant ones. Wages are not collapsing; in the ledger of studies, newcomers tend to create at least as many opportunities as they occupy.

None of this erases the real work of integration, fairness, and sensible rules. But the research points one direction more often than not. A country that keeps attracting the world's strivers has a resource its rivals cannot easily copy — and that has never been a weakness. It's the closest thing America has to a quiet, renewable advantage.

References

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