Common Tragedies

Thoughts on Environmental Economics

Dey took er jerbs!, H-1B edition

Posted by Evan Herrnstadt on February 18, 2009

Michael Clemens at the Views from the Center blog points out that the Grassley-Sanders (!) amendment to the stimulus bill places new restrictions on hiring practices of firms receiving TARP funds; specifically, it will be more difficult for these firms to hire highly-skilled foreigners on H-1B visas.  Seems to me that restricting extremely talented MBA’s and the like from staying in the U.S. is not necessarily the best medicine for firms that are struggling to stay afloat under an anchor of poisonous assets.

In addition, Clemens relates the following:

That’s just one example of a trend we can expect to grow: Last Friday at Columbia University I publicly debated one of rising number of Americans who feel that the crisis is a reason to welcome drastically fewer people to this country, even highly skilled workers. “Buy American”, via immigration policy, is gaining credibility as a solution to the crisis.

His main economic counterpoints:

  1. Immigration and unemployment are, if anything, negatively correlated.  In fact, highly-skilled workers (such as those here on H-1B’s) seem to create jobs by improving existing companies and starting their own ventures.
  2. Developing nations benefit greatly when their citizens come the U.S. to be trained and work for a while.  They send home remittances and mantain/form networks with their home country, thus accelerating trade, investment, and technological change abroad.  Yes, we are having extremely tough times here, but Clemens urges us to consider the dark outlook for an already-impoverished nation in these global economic circumstances.

Clemens also points us to Bill Kerr of Harvard Business School.  In a recent paper, he found that when H-1B visa numbers went down, so did patent applications filed by immigrants in the U.S.  When H-1B numbers went up, patent applications followed suit.  In fact, he even found “little impact on the invention rates of native U.S. workers.  Most increases in U.S. innovation with higher H-1B admissions come through direct contributions of the immigrants themselves.”

In this case, the trend toward recession anti-immigration sentiment is concerning for all aspects of our economy,  especially as we begin sinking large amounts of money into basic research in biomedical and energy sciences.  Most estimates of highly-educated labor supply find it to be quite inelastic in the short run as one must acquire extensive training to join the science and engineering workforce.  The last thing we need to be doing at this point is restricting extremely talented, creative entrepreneurs from entering our economy and innovating.  To treat an H-1B foreign hire as simply a one-to-one crowd out of an American from his/her job is extremely fallacious.

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One Response to “Dey took er jerbs!, H-1B edition”

  1. [...] on progress towards increased societal welfare. Take the recent stimulus bill as an example. As reported by Common Tragedies (and originally by Michael Clemens): The Grassley-Sanders [Charles Grassley (R-IA), Bernie Sanders [...]

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