Immigration Policy: Is the U.S. the International Champ, or Chump?

Bulls

Let’s consider an analogy. Consider a sports franchise. This franchise has the best playbook, best players in the lineup and arguably great management (staff and coach). This team has a great fundamental game, and recently won 3 national championships. But the team faces a problem; their super-stars are getting older, and some are in the process of moving on. New players are still interested in playing for the team because of their recent success, but there is a strange problem facing the team.

They spend a significant amount of their money and time training newly drafted team members. But just as the athletes are hitting their prime, the team always seems to trade their up-and-coming stars to other franchises for their most inexperienced players. They still have a few of the older, well-known players, but they aren’t retaining any of their up-and-coming talent. So, where do you think this franchise is headed?

It’s pretty clear that a successful team’s lineup needs to have players in all phases of their career so that there is a smooth transition. Without this, you end up like my basketball team during the first decade of the 2000′s; the Chicago Bulls, and the fall from the top wasn’t done gracefully. Even though their playbook was still pretty good, because the bench was overly dependent upon a few players, they could never get very far when it really counted: in the post-season.

It’s fitting to consider the Unites States’ immigration policy and its impact on “the franchise’s” ability to compete. Make no mistake, the United States is in an international competition tied to its ability to harness innovation and increase productivity. Worker skills and talent must come first. Yet, the current immigration policies are causing exactly what I described above. So, what should be done?  How do we attract, keep and foster the success of the best and brightest players available?

We just signed another four year contract with the coach. So, it looks like we need to take a good look at the recruiter’s manual and write a new one. But before we write it, let’s consider what the current manual really includes so we can be sure to learn from our past successes as well as current mistakes. We must also consider other successful nations strategies and incorporate the best-practices that we observe; rather than start from scratch. It should be clarified that the coach and staff, the playbook, and the recruiter are all separate issues, but they are all integral in determining the team’s success. Without great talent, the best coaches and staff simply can’t win. Without great leadership, support and policies, then even the best talent will be unsuccessful.

This is exactly where we are today; like the Bulls of the early 2000′s. The United States is 9th in total R&D investment, 21st in federal R&D investment, at the 68-percentile in mathematics-literacy and less than the 50th percentile in science-literacy.

We have two ways to approach the thinning talent pool: (1) continue to play a rookie lineup based upon #1 draft-picks each season, or (2) change the strategy and develop depth in the lineup by recruiting the best, AND retaining them.

The academic research is clear; businesses, universities, cities, regions and countries that attract and retain the top minds experience significant gains. Brilliant thinkers bring with them significant positive-spillovers. For example, when a top chemist comes to the United States from abroad, the United States does not just enjoy the benefits of that scientist’s research alone. What happens is that the introduction of new ideas has effects that cascade through his or her peers, spurring all kinds of new ideas and solutions to problems that simply couldn’t have occurred without the addition of the new knowledge. This is exactly what recent work by Pierre AzoulayFabian WaldingerWilliam KerrGeorge Borjas, and many others show; that having the top minds employed locally leads to big gains in new innovation. This then, according to Coe & Helpman, leads directly to increased economic growth.

The creation or immigration of highly skilled workers doesn’t just spillover through the transmission of and subsequent development of new ideas. There are direct impacts too. When a new, highly skilled, highly productive worker (and his or her family) moves to a location, they bring with them high-wages. These wages are generally spent in the local economy, which induces the creation of other new jobs that support the needs of the new worker. Giovanni Peri shows exactly this. In fact, Moretti shows that the introduction of 1 new, highly-skilled worker actually induces approximately 5 other new jobs in the local economy.

So, what is the United States doing to better capture these potential gains through policy?  It’s actually not all bad. According to The Migrant Integration Policy Index:

“Overall, the U.S. ranked ninth in terms of integration policies, and first in terms of its strong anti-discrimination laws and protections. The U.S. also ranked high on the access to citizenship scale because it encourages newcomers to become citizens in order to fully participate in American public life. Compared with other countries, legal immigrants in the U.S. enjoy employment opportunities, educational opportunities, and the opportunity to reunite with close family members. However, MIPEX also acknowledges that the U.S.’s complex immigration laws, limited visa ability, high fees, and long backlogs may make it challenging for immigrants to integrate into the fabric of American life.”

So, when an immigrant has some reason to stay and they apply for permanent citizenship, they really do become fully incorporated into the U.S. economy. Unfortunately, the barriers to citizenship are extremely strong, and in the auspice of fairness, aren’t aimed in any strategic manner. This is where we need to follow the Canadians. Those that come to the United States for the purposes of education should be granted citizenship. Those that come to work in high-tech, high-value-added industries, or R&D should be granted citizenship.

Finally, we shouldn’t be looking solely abroad for new talent; we should also be fostering its development from the existing citizenry. Education reform, which looks to measure and incite real skill development, in combination with immigration reform is crucial in building up the United States’ lineup. Only then, will we once again be a top contender for the international championship in the competition for sustainable economic growth.

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About the author

Justin Hicks joined ITIF in June of 2012 as Senior Economic Policy Analyst. Prior to joining the ITIF as Senior Economic Policy Analyst, Justin Hicks finished his Ph.D. in Economics at the University of California, Merced. His research focused on potential spillovers of cooperative R&D in the international setting as well as the impact of funding on R&D productivity in universities. In his current research, he looks to identify the effect of trade policy on the flow of ideas and home-country R&D productivity. His primary expertise lies in using applied microeconometrics to identify causal relationships using large data-sets. Prior to receiving his Ph.D., Justin achieved a M.A. in economics and a B.A. in Business economics from the University of California, Riverside.