A new paper in the QJE, The Global Race for Talent: Brain Drain, Knowledge Transfer, and Growth, by Marta Prato uses extensive data on inventors and their migration to make the following points.
(i) gross migration is asymmetric, with brain drain (net emigration) from the EU to the United States; (ii) migrants increase their patenting by 33% a year after migration; (iii) migrants continue working with inventors at origin after moving, although less frequently; (iv) migrants’ productivity gains spill over to their collaborators at origin, who increase patenting by 16% a year when a co-inventor emigrates.
Notice that migration doesn’t just relocate talent from the EU to the US; it amplifies talent. Preventing “brain drain” would create short-term gains for the EU but retaining talent at lower productivity would stifle long-term innovation and patenting, ultimately slowing growth for both the EU and the world. In short, even the EU gains from sending talent to the US! The effect would be much larger if we can import high-skill immigrants from countries where their skills are even less productive than in the EU. Ideally, other nations could replicate the US institutions that supercharge productivity, creating global economic gains. For now, however, the US seem to be a unique Galt’s Gulch for talent.
Prato concludes with a practical suggestion:
On the migration policy side, doubling the size of the U.S. H1B visa program increases U.S. and EU growth by 4% in the long run, because it sorts inventors to where they produce more innovations and knowledge spillovers.
Of course, when we expand the H1B program, we should allocate the visas by compensation rather than by lottery. (Jeremy Neufeld runs the numbers). In this way, we would get the most valuable workers. And please don’t tell me that we need a lottery so some poor startup can hire workers. No. Unless you have some compelling argument for why there is a massive externality and why lotteries (lotteries!) are the best way to target that externality we should let price allocate.
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