A Schar School study released earlier this year drew national attention, and for good reason: The research examined the rates of innovation by immigrants in the U.S. and found that native-born entrepreneurs were, in effect, being demolished by their immigrant-owned competition.
The study, Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector, was compiled by Schar School Professor of Public Policy John S. Earle, PhD student Mee Jung Kim, and Kyung Min Lee (’19 Public Policy PhD), along with J. David Brown of the U.S. Bureau of the Census. The working paper was delivered under the auspices of the National Bureau of Economic Research in Washington, D.C.
“We were interested both in entrepreneurship and in immigrants, and this paper brought the two interests together,” Earle said. “Regarding entrepreneurship, we had written a paper arguing that much of the research on ‘high-growth firms’ misses the most important source of growth, which comes from entry of new businesses and their early development.
“Concerning immigration, we noticed that while there has been a lot of research on the effects of immigration on native worker wages—and generally fails to find any substantial negative effect—there was a comparative dearth of analysis of immigrants as entrepreneurs.”
While anecdotal evidence of the innovations of immigrants to the U.S. are easy to find, Earle said there were few studies beyond those measuring firm size and growth. Using a new federal database of 11,000 owners of 7,400 high-tech employer businesses, the study found that businesses owned by immigrants performed at uniformly higher rates of innovation in 15 of 16 innovation measures.
“In other words,” concluded Forbes columnist Simon Constable, “the foreigners are more innovative on more than 93 percent of the metrics that the researchers used to evaluate the different groups.”
“It was surprising how consistent the results are, in that immigrant entrepreneurs engage in more innovation activities, research and development, and patenting—across a host of innovation measures,” Earle added.
As for the contribution of the students, “Mee Jung and Min were crucial members of the team,” Earle said. “We had many enjoyable sessions discussing hypotheses, devising econometric strategies, and looking over and interpreting the statistical estimates. This paper is one of several we are doing together, two of which are already accepted for publication. It’s intellectually exciting, and it’s fun!”