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Immigrants and US innovation

By Petra Moser

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...foreign workers also bring new knowledge and a different set of talents and skills that complement the United States economy.

Last month, nearly 100 top US technology companies filed an appeal against President Trump’s executive order on immigration. Tech companies like Google, Microsoft, and Facebook have voiced concerns about the human costs of the order on immigrant employees and their families. Yet the effects of the ban – or any other move that discourages high-skilled immigration – may also create important economic costs by discouraging American innovation.
Critics of immigration argue that the inflow of immigrants hurts domestic workers who have to compete with immigrants for jobs. But foreign workers also bring new knowledge and a different set of talents and skills that complement the United States economy.
In recent research, my co-authors and I examined the effects of an earlier, politically motivated shift in immigration, when Jewish scientists fled Nazi Germany. In 1933, only four weeks after Adolf Hitler took power in Germany, he dismissed Jewish scientists German universities. After that roughly 2,000 physicians, 1,500 writers, 1,500 musicians, and 2,400 academics Jewish refugees arrived in the United States. In physics, émigrés such as Leo Szilard, Eugene Wigner, Edward Teller, John von Neumann, and Hans Bethe formed the core of the Manhattan project that developed the atomic bomb. In chemistry, émigrés included several Nobel Laureates, Otto Meyerhof (Nobel Prize 1922), Otto Stern (Nobel Prize 1943), Otto Loewi (Nobel Prize 1936), as well as many other prominent scientists.
To measure the effects of the émigrés on American inventors, we examined changes in US patents by domestic inventors. Specifically, we compared the increase in patents by US inventors for research fields that received an émigré with research fields of other German scientists who were allowed to stay in Germany. This test showed that American invention received an enormous boost from the arrival of the émigrés. In fields that received an émigré US inventors produced more than 30 percent additional patents after 1932. These benefits persisted until the end of the 1960s.
What is particularly striking that the increase in US patenting was not limited to the émigrés, but instead appears to be driven by their contacts with American inventors. We found that co-inventors of the émigrés – and the co-inventors of co-inventors – also became active patentees in the research fields of émigrés. These networks of invention suggest that the arrival of refugee scientists increased American inventions by bringing US scientists in contact with a new set of ideas and methods that they could use in their own work.
I am an economic historian, and not an expert on national security, but there is another relevant parallel between the historical United States and today. In the 1940s as today, we worried about the security threats posed by accepting refugees. German-Jewish immigrants were affected by this because American agencies regarded them primarily as German. Visa restrictions made it difficult for them to come to the United States. Reading hundreds of scientists’ biographies, I was struck by the large number of émigrés that went to other countries (primarily Britain), and the even larger numbers who perished at the hands of an oppressive regime. These losses were felt particularly deeply the affected families. Our research suggests that they also created large economic costs for US innovation.

Petra Moser is an Associate Professor of Economics.