Research
PUBLICATIONS
Skilled Immigrants, Firms, and the Global Geography of Innovation. Journal of Economic Perspectives (Winter 2024).
This article begins with an overview of the policy environment in the United States and abroad for skilled immigration, with a particular focus on "supply-driven" versus "demand-driven" systems. The overview emphasizes that firms play a central role in the skilled immigration process in most countries. I then survey the ample evidence that skilled immigrants have a strong positive effect on firm outcomes, followed by a discussion of the many margins of adjustment that firms have when their access to skilled immigrants is affected by national immigration policy. Finally, given such margins of adjustment and the importance of skilled immigrants to firms, I consider how the policies that affect skilled migration shape the global geography and quality of innovation. I conclude by discussing policy implications and open questions. In particular, I emphasize that evaluations of the impact of skilled immigration should not be constrained within borders: immigration flows and national immigration policies affect the global geography of innovation and investment.
Does Employing Skilled Immigrants Enhance Competitive Performance? Evidence from European Football Clubs, with Francisco Morales, Seth Carnahan, and Exequiel Hernandez. Forthcoming at Management Science.
We investigate the effect of hiring skilled immigrant employees on the performance of organizations. This relationship has been difficult to establish in prior work due to theoretical ambiguity, limited data, and inherent endogeneity. We overcome these difficulties by studying European football (soccer) clubs during 1990-2020. Detailed microdata from this setting offers unusual transparency on the migration and hiring of talent and their contribution to collective performance. Further, the industry is characterized by country-level rule changes that govern the number of immigrant players clubs can hire. Using these rule changes as the basis for instrumental variables, we find a positive local average treatment effect of the number of immigrant players on the club’s in-game performance. To examine the theoretical mechanisms, we explore whether immigrants cause superior performance because they are more talented than natives or because they enhance the national diversity of their clubs. We find strong evidence for the talent mechanism. We find contingent evidence for the national diversity mechanism: national diversity has a positive relationship with club performance only when the club employs an immigrant manager (coach). The presence of an immigrant manager also strengthens the positive relationship between the number of immigrant players and club performance.
Press Coverage: Forbes, The Weeds (Vox’s podcast, starting minute ~36), Knowledge@Wharton, Aspen Institute’s 5 Best Ideas of the Day (Jan 10, 2022)
SMS Best Conference Paper Prize Finalist, Strategy Science Best Paper Award
How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program. Management Science (2023).
Skilled immigration restrictions may have secondary consequences that have been largely overlooked in the immigration debate: multinational firms faced with visa constraints have an offshoring option, namely, hiring the labor they need at their foreign affiliates. If multinationals use this option, then restrictive migration policies are unlikely to have the desired effects of increasing employment of natives, but rather have the effect of offshoring jobs. Combining visa data and comprehensive data on US multinational firm activity, I find that restrictions on H-1B immigration caused foreign affiliate employment increases at the intensive and extensive margins, particularly in Canada, India, and China.
Summaries: NBER Digest September 2020 Edition, Cato Institute
Press Coverage: The Wall Street Journal, Forbes, The New York Times, The Economist, The Washington Post, Bloomberg, Protocol, BBC, NPR MarketPlace, Marketwatch
Finalist: INFORMS/Org Science Dissertation Proposal Competition
Women are Credited Less in Science than are Men, with Matthew B. Ross, Raviv Murciano-Goroff, Enrico Berkes, Bruce Weinberg, and Julia Lane. Nature (2022).
There is a well-documented gap in the observed number of scientific works produced by women and men in science, with clear consequences for the retention and promotion of women in science1. The gap might be a result of productivity differences2-5, or it might be due to women’s contributions not being acknowledged6,7. This paper finds that at least part of this gap is due to the latter: women in research teams are significantly less likely to be credited with authorship than are men. The findings are consistent across three very different sources of data. Analysis of the first source - large scale administrative data on research teams, team scientific output, and attribution of credit - show that women are significantly less likely to be named on any given article or patent produced by their team relative to their peers. The gender gap in attribution is found across almost all scientific fields and career stages. The second source – an extensive survey of authors – similarly shows that women’s scientific contributions are systematically less likely to be recognized. The third source – qualitative responses – suggests that the reason is that their work is often not known, not appreciated, or ignored. At least some of the observed gender gap in scientific output may not be due to differences in scientific contribution, but to differences in attribution.
Press coverage: Washington Post, Science, The Guardian, The Hill, STAT News, Axios, Times Higher Education, Forbes (Education), Forbes (Business), The Times, El País, Ars Technica, Deutschlandfunk
WORKING PAPERS
The Effect of Immigration Policy on Founding Location Choice: Evidence from Canada’s Start-up Visa Program, with Saerom (Ronnie) Lee. (R&R)
To spur entrepreneurship and economic growth, an increasing number of countries have introduced immigration policies that provide visas to skilled entrepreneurs. This paper investigates whether these policies influence the founding location choice of immigrant founders, by leveraging the introduction of Canada's Start-up Visa Program in 2013. We demonstrate that this immigration policy increased the likelihood that U.S.-based immigrants have a start-up in Canada by 69\%. Our results show that Asian immigrants (who have a higher representation in Canada than in the U.S.) are disproportionately more likely to migrate to Canada to start their businesses, whereas Hispanic immigrants (who have a smaller representation in Canada than in the U.S.) are less inclined to do so. We also find that this propensity varies with the size of co-ethnic immigrant communities in the origin location. Overall, our study unveils the importance of immigration policies in determining founding location choice and has important implications for countries competing for global talent.
Summaries: NBER Digest May 2024 Edition
Press Coverage: Forbes
Building a Wall Around Science: The Effect of U.S.-China Tensions on International Scientific Research, with Raviv Murciano-Goroff, Robert Flynn, and Jiusi Xiao.
This paper examines the impact of rising U.S.-China geopolitical tensions on three main dimensions of science: STEM trainee mobility between these countries, usage of scientific works between scientists in each country, and scientist productivity in each country. We examine each dimension from a “U.S.” perspective and from a “China” perspective in an effort to provide evidence around the asymmetric effects of isolationism and geopolitical tension on science. Using a differences-in-differences approach in tandem with CV and publication data, we find that between 2016 and 2019 ethnically Chinese graduate students became 16% less likely to attend a U.S.-based Ph.D. program, and that those that did became 4% less likely to stay in the U.S. after graduation. In both instances, these students became more likely to move to a non-U.S. anglophone country instead. Second, we document a sharp decline in Chinese usage of U.S. science as measured by citations, but no such decline in the propensity of U.S. scientists to cite Chinese research. Third, we find that while a decline in Chinese usage of U.S. science does not appear to affect the average productivity of China-based researchers as measured by publications, heightened anti-Chinese sentiment in the U.S. appears to reduce the productivity of ethnically Chinese scientists in the U.S. by 2-6%. Our results do not suggest any clear “winner,” but instead indicate that increasing isolationism and geopolitical tension lead to reduced talent and knowledge flows between the U.S. and China, which are likely to be particularly damaging to international science. The effects on productivity are still small but are likely to only grow as nationalistic and isolationist policies also escalate. The results as a whole strongly suggest the presence of a “chilling effect” for ethnically Chinese scholars in the U.S., affecting both the U.S.’s ability to attract and retain talent as well as the productivity of its ethnically Chinese scientists.
Summaries: NBER Digest October 2024 Edition
Press Coverage: Fortune, The Chronicle of Higher Education, University World News, National Academies Report
Does Offshoring Manufacturing Harm Innovation? Firm-level Evidence from Taiwan, with Lee Branstetter, Jong Rong Chen, and Nikolas Zolas (R&R)
Does the offshoring of production degrade or enhance the innovative capabilities of manufacturing firms? We contribute to this debate by exploiting a policy shock that differentially affected the ability of Taiwanese firms to offshore some products to China. We find causal evidence that offshoring impacts both the level and nature of innovation. In the technologies directly related to product categories that could be offshored more easily after the policy shock, overall innovation levels decline and innovative effort shifts away from product innovation and towards process innovation. However, we also find evidence of a second-order positive effect of offshoring on the levels of innovation—particularly product innovation—in other parts of the firm’s portfolio. These results are consistent with the notion that offshoring production induces a complex reallocation of innovation effort within the firm, both across and within technology categories. Our paper examines this reallocation in the context of Taiwanese electronics firms, and introduces new methods that could be used to study post-offshoring reallocations of innovative effort in other contexts.
Press Coverage: The Economist
Doing Frontier Innovation in Non-Traditional R&D Locations: Lessons from U.S. Multinational Firms, with Lee Branstetter and J. Bradford Jensen (R&R)
This paper investigates the dynamic relationship between the intrafirm R&D structure of multinational firms and their innovative output, utilizing linked confidential and comprehensive microdata on US multinational firms to patent data from 1994 to 2014. We find first that foreign affiliate research teams have become much more integrated with and embedded into the rest of the multinational R&D network, and that there has been a pronounced shift away from the primacy of dyadic patterns (hub and spoke) of co-invention linking foreign affiliates with the U.S. home base and toward a true network structure of co-invention, in which foreign affiliates collaborate and co-invent with one another. And we find that R&D-performing foreign affiliates are more likely to produce impactful research when they are more central within the MNC’s larger network. We argue that these results represent a strategic and dynamic process by which foreign research teams are integrated into the R&D networks of leading US MNCs, providing foreign inventors with complementary knowledge that enhances their inventive productivity.
WORK IN PROGRESS
The Incidence and Effects of Economic Espionage on American Firms: Evidence from Federal Prosecutions, with Daniel P. Gross and Lia Sheer
Immigrant CEOs, with Ashlee Li, Prithwiraj Choudhury and Dany Bahar
Connections and Credit: How Social Networks Shape the Gender Gap in Research Output, with Russell Funk, Raviv Murciano-Goroff, and Matthew B. Ross
Immigrant Scientist Career Choices and the Shape of Science: Evidence from Artificial Intelligence PhDs, with Caroline Fry (R&R)
Production and diffusion of scientific knowledge: evidence from the Turkish failed coup, with Stefano Baruffaldi, Kirk Doran and Gabriele Pellegrino.
BOOK CHAPTERS
“The IT Revolution and the Globalization of R&D.” Chapter in NBER book Innovation Policy and the Economy 2019, Volume 19. Josh Lerner and Scott Stern, editors. University of Chicago Press.
- with Lee Branstetter and J. Bradford Jensen
Since the 1990s, R&D has not only become less geographically concentrated, but there has been especially fast growth in less developed emerging markets like China and India. One of the distinguishing features of the R&D globalization phenomenon is its concentration within the software/IT domain. The increase in foreign R&D on the firm side has been largely concentrated within software and IT-intensive multinationals. This concentration is mirrored on the country side; new R&D destinations such as India, China, and Israel look very different in the types of innovative activity being done there than older R&D destinations such as Germany, France, the UK, Canada, and Japan. In this paper we will document three important phenomena: (1) the globalization of R& D by US MNCs, (2) the growing importance of software and IT to firm innovation, and (3) the rise of new R&D hubs, and the differences in the type of activity done there. We argue that the shortage in software/IT-related human capital resulting from the large IT- and software-biased shift in innovation drove US MNCs abroad, and particularly drove them abroad to “new hubs” with large quantities of STEM workers who possessed IT and software skills. Our findings support the view that the globalization of US multinational R&D has reinforced the technological leadership of US-based firms in the information technology domain and that multinationals’ ability to access an increasingly global talent base could support a high rate of innovation even in the presence of the rising (human) resource cost of frontier R&D.
Summaries: VoxEU
Press Coverage: Bloomberg, ScienceDaily, ZDNet, CIO Drive
“The Weighty Manufacturing Sector: Transforming Raw Materials into Physical Goods.” Chapter in NBER book The Role of Innovation and Entrepreneurship in Economic Growth. Aaron Chatterji and Scott Stern, editors. Forthcoming.
- with Erica R.H. Fuchs, Christophe Combemale, and Kate S. Whitefoot
The manufacturing sector encompasses a diverse set of industries that are involved in the transformation of raw materials into physical goods. Over the last two decades, the U.S.’s manufacturing value added (MVA) has slightly grown, however, the U.S.’s percentage of global MVA has declined due to China’s exponential rise. Likewise, in contrast to net employment in the U.S. economy, which has increased, net employment in manufacturing (while growing slightly since 2010) is significantly lower than in the 1980s. As a whole, the manufacturing sector involves higher value added per capita employed, a greater proportion of the labor force with education at the high school level or below while having on average higher wages for that labor force, higher industry spending on R&D, and fewer private equity/ venture capital deals financing new ventures than non-manufacturing industries such as services (including software). The U.S.’s relatively high R&D spending on manufacturing (66% of industrial R&D) and comparatively low manufacturing value added (14%) is at least in part due to the globalization of manufacturing facilities in the last decade. The above said, drawing implications from sector-wide trends can be misleading because of the variation in these indicators across sub-sectors. At the five-digit NAICS code level, the top sources of employment are animal processing, aerospace products, and printing (on various materials including textile, metal, plastics); the top sources of revenue are petroleum refineries and automotive; and the top source of R&D spending is pharmaceuticals. Considering the sector’s diversity will be critical to understanding productivity and labor outcome effects, and appropriate policy responses, if any.
“The New Global Invention Machine: A Look Inside the R&D Networks of U.S. Multinationals” Chapter in Brookings Global Goliaths: Multinational Corporations in the 21st Century Economy. Fritz Foley, David Wessel, and James Himes, editors. April 20, 2021.
- with Lee Branstetter and J. Bradford Jensen
We present evidence showing that US multinational firms are creating a global division of R&D labor akin to global value chains in goods production, where activities are located in regions where production is most efficient. We argue that this system, properly managed, brings global benefits by increasing the innovative capacity of the global economy. These benefits may become increasingly important in the context of a global innovation slowdown many experts believe is already underway. Unfortunately, policy trends in the U.S. and elsewhere complicate the operation and increase the risks associated with this globalization of R&D.
Featured in: Brookings podcast, “What’s behind the globalization of R&D?”
POLICY BRIEFS and OP-EDs
- with Lee Branstetter and J. Bradford Jensen. Chapter 10 in Posen, A. and Ha, J., (eds.), U.S.-China Cooperation in a Changing Global Economy, Peterson Institute Policy Brief 17-1, January 2017.
“The Rise of Global Innovation by US Multinationals Poses Risks and Opportunities”
- with Lee Branstetter and J. Bradford Jensen. Peterson Institute Policy Brief 19-9, June 2019.
Brookings Blog. 20 July 2020.
DORMANT PROJECTS
The Effect of Fiscal Stimulus: Evidence from COVID-19, with Miguel Garza Casado, Julia Lane, David McQuown, Daniel Rich, Bruce A. Weinberg
