DP14719 Immigration, Innovation, and Growth

Author(s): Konrad B. Burchardi, Thomas Chaney, Tarek Alexander Hassan, Lisa Tarquinio, Stephen Terry
Publication Date: May 2020
Date Revised: November 2021
Keyword(s): dynamism, Endogenous Growth, Innovation, Migrations, patents
JEL(s): J61, O31, O40
Programme Areas: International Trade and Regional Economics, Development Economics, Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14719

We show a causal impact of immigration on innovation and growth in US counties. To identify the causal impact of immigration, we use 130 years of detailed data on migrations from foreign countries to US counties to isolate quasi-random variation in the ancestry composition of US counties; interacting this plausibly exogenous variation in ancestry composition with the recent inflows of migrants from different origins, we predict the total number of migrants flowing into each US county in recent decades. We show immigration has a positive causal impact on innovation, measured as patenting of local firms, and on economic growth, measured as real income growth for native workers. We interpret those results through the lens of a quantitative model of endogenous growth and migrations. A structural estimation of this model targeting the well identified causal impact of migration on innovation suggests the large inflow of foreign migrants into the US since 1965 may have contributed to an additional 8% growth in innovation and 5% growth in wages.