High-skilled immigrants are key to entrepreneurship, growth, and innovation.

These policy actions were made under the pretext of protecting American workers and ensuring economic opportunities would not be taken away from citizens in light of economic fallout from the COVID-19 pandemic. However, they have reinvigorated a debate around United States immigration policies, especially those designed to attract high-skilled immigrants to work, learn, start businesses and innovate in the U.S. A growing body of rigorous academic literature demonstrates that high-skilled immigrants provide a range of long-lasting and material benefits to the U.S. economy, particularly through entrepreneurship and innovation. Consequently, it is important that the U.S. both address the current employment crisis as well as plan for a post-recovery future where it must remain competitive in the global economy.

Immigrants are Entrepreneurial

Immigrants are an integral part of the American entrepreneurial ecosystem. In fact, immigrants around the globe appear to be more entrepreneurial than their native-born counterparts. Analysis of immigrant occupational tendencies indicate that in many developed countries, including the United States, immigrants have higher rates of business ownership compared to native-born citizens (Borjas, 1986; Fairlie & Lofstrom, 2015; Fairlie, Zissimopoulos, & Krashinsky, 2010; Lofstrom, 2002), although the exact rate has varied, depending on the scope of the study.

High-Tech, High-Growth Firms

In recent years, debate has centered on the economic impact of high-skilled immigrant entrepreneurs, especially in high-growth sectors such as the tech sector. Since high-growth industries play a pivotal role in broader economic conditions through job creation and tax revenue, it is important to understand the value immigrant founders in these industries have in their sectoral and regional environments. Research on U.S.-based, high-skilled immigrant entrepreneurs often focuses on the Silicon Valley region. Saxenian (2002) pioneered research that examines the economic contributions of skilled immigrants, especially those of Chinese and Indian origin, to the San Francisco Bay Area, as well as California overall. The analysis documents how a transformation of the U.S. immigration system, via the Hart-Cellar Act of 1965 and the Immigration and Naturalization Act of 1990, coincided with the growth of emerging high-technology industries in Silicon Valley. These new immigration policies favored highly educated immigrants, including engineers and scientists. As Silicon Valley’s need for a skilled workforce increased through the 1970s and 1980s, more foreign-born workers were helping to fulfill this need. By 1990, 25 percent of the total Silicon Valley workforce was foreign-born, with most of the workers concentrated in professional occupations.

Taking a wider view, later studies measure the impact of skilled immigrants on the high-tech sector throughout the United States. In particular, Hart and Acs (2011) conducted a representative study of 1,300 high-impact firms in high-tech fields. They found that 16 percent of the companies have at least one immigrant on the founding team. Although this number is lower than that documented by Saxenian (2002) for the Silicon Valley region, it represents a significant contribution of immigrant talent to American firms.

When looking at the founding of the United States’ largest startups—widely known as “unicorns” (startups with an estimated value of $1 billion or more)—immigrants play a starring role. According to a report from the National Foundation of American Policy, as of October 2018, 50 of the 91 unicorn startups (or 55 percent) had at least one immigrant founder. These immigrant-founded startups employ an average of more than 1,200 workers each, and have a collective value of $248 billion (Anderson, 2018b).

Implications for the Greater Innovation Economy

Beyond entrepreneurship, high-skilled immigrants contribute significantly to the overall innovation of American firms. Several studies have measured the innovation impact of immigrants using patent data. According to Bernstein, Diamond, McQuade, & Pousada (2018), immigrants produce more patents, patent citations and patent-derived economic value than native citizens. Despite being just 16 percent of inventors in 2018, they were responsible for 23 percent of patent production during that time period.

A significant indicator of skilled immigrants’ value to American innovation is the economic worth of their patenting. Bernstein et al. (2018) find that immigrants have ge

nerated 25 percent of the aggregated economic value created by patents produced by publicly traded firms. This is a significant contribution, equating to a 47 percent increase relative to their share of the inventor population working for publicly traded companies.