Economic Effects of High-Skilled Immigration to the United States

Abstract

High-skilled immigrants with advanced education or specialized expertise are an integral part of the United States (U.S.) workforce and fill critical roles in technology, healthcare, and academia. Inflows of high-skilled immigrant workers into the U.S. have led to extensive research on their economic impacts. This review analyzes evidence on the impact of high-skilled immigration on wages and employment, innovation, productivity, entrepreneurship, and economic growth, concluding that, despite limited short-term pressures in niche labor markets, the overall economic effects are positive. High-skilled immigrants are key drivers of innovation, entrepreneurship, and productivity growth, ultimately raising GDP and living standards.

Introduction

In the United States (U.S), high-skilled immigrants with advanced education or specialized expertise are vital to supporting the workforce, mitigating skilled labor shortages, and expanding innovation and productivity. They make up a significant proportion of the critical workforce in technology, healthcare, and academia. For example, high-skilled immigrants account for an estimated 19% of all science, technology, engineering, and mathematics (STEM) professionals in the U.S. (National Centre for Science and Engineering 2024; Panel on the Economic and Fiscal Consequences of Immigration [PEFCI] 2017), fulfilling roles as scientists, engineers, and IT professionals. The rise of the digital economy and biotechnology has led to an influx of computer software developers and systems analysts, and immigrant talent is an essential part of Silicon Valley and other tech clusters (Kent 2011). Many companies rely on international graduates for specialist roles in programming, engineering, and research, and immigrant scientists contribute to substantial research and development efforts across government, industry, and academia (Rovito et al. 2021).

Within the U.S. healthcare system, highly skilled immigrants play a key part in patient care and medical research. The United States heavily relies on foreign-born doctors, nurses, and other health professionals to meet its healthcare needs. As of 2021, approximately 26% of all physicians and surgeons practicing in the U.S. were foreign-born (Batalova 2023). Immigrants are also prominent among dentists, pharmacists, medical scientists, and registered nurses (Batalova 2023). This high representation results from both the U.S. training of international medical graduates and the recruitment of healthcare workers from abroad, often to address shortages. Without immigrant healthcare workers, many communities would face greater difficulty accessing medical services. Immigrant physicians frequently serve in high-demand specialties such as primary care, internal medicine, and geriatrics, as well as in underserved areas. Rural hospitals and inner-city clinics alike have benefited from immigrant doctors and nurses who alleviate staffing shortfalls (Pawelski 2024; Thompson et al. 2009).

In academia, foreign-born scholars play a major role in higher education and research in the U.S. as graduate students, postdoctoral researchers, and university faculty members. International students comprise approximately 5% of the total U.S. college student population, yet they account for nearly half of all postgraduate degrees in STEM fields. In 2019, they obtained approximately 117,000 STEM graduate degrees, nearly half of the total, despite making up only roughly 5% of the student population. (National Association of Foreign Student Advisers 2022). This number illustrates the extent to which U.S. universities and the country more broadly rely on international talent to produce the next generation of scientists, engineers, and other STEM professionals. After graduation, a significant number of these graduates remain in the U.S. They frequently serve as researchers, professors, and teaching assistants, educating domestic students and frequently collaborating internationally, thereby linking U.S. research to global networks and helping to ensure U.S leadership in many emerging technologies. Likewise, they enter the workforce through various immigration pathways designed to permit U.S. industry and commercial interests to benefit from their training and expertise.

This contribution to the U.S. workforce from high-skilled immigrants has grown rapidly in recent decades, facilitated by the introduction of the H-1B visa under the Immigration Act of 1990, which permits U.S. employers to hire highly educated foreign nationals for certain occupations requiring specialization. As of 2011, the U.S. Census Bureau estimated that 27% of foreign-born workers had a college degree (compared with 28% of U.S.-born workers), and that 29% of U.S. workers holding doctoral degrees were immigrants (NCSES 2024). This flow of high-skilled immigrant workers has led to extensive research on its economic impact in the U.S, particularly on the nation’s capacity to adapt, innovate, and maintain economic growth (i.e., economic dynamism). This report synthesizes existing evidence to outline how high-skilled immigration shapes the U.S. economy, with specific attention to its impacts on wages and employment, innovation, productivity, entrepreneurship, and aggregate economic growth.

Employment and Wages

Despite concerns that skilled immigrants may take jobs from native-born workers, suppress wages, or increase competition for certain roles, the broad consensus in economic studies is that high-skilled immigration has minimal negative impact on native-born workers’ average wages and employment prospects and instead results in the creation of additional employment opportunities (Aubry et al. 2026; Card 2009; Zavodny, 2011). A comprehensive 2017 review by the PEFCI concluded that there was minimal evidence that high-skilled immigration lowers wages or displaces native workers in high-skill sectors. In fact, evidence from real-world and modelled data shows a modestly positive impact for native-born workers in the long run. An analysis of U.S. Current Population Survey (CPS) data from 1994–2013 found that wages for native-born workers tend to rise when foreign-born skilled workers serve as complements instead of substitutes, particularly in non-computer STEM fields. In the same study, simulation modelling suggested that, had the increase in skilled immigrants not occurred, native workers would have experienced lower wages and fewer opportunities (Ma 2020). Similarly, analyses comparing U.S. cities that experienced larger versus smaller increases in the numbers of H-1B STEM workers found that larger numbers of H-1B STEM workers correlated with positive wage effects for native-born workers. Specifically, a one-percentage-point increase in foreign STEM employment was associated with a 7–8% increase in wages for native-born college graduates and a 3–4% increase for native-born workers without a college degree (Peri et al. 2015). Crucially, no relationship was observed between unemployment among native-born residents and the city’s proportion of high-skilled immigrants (Peri et al. 2014). This data may reflect the role of high-skilled immigrants in stimulating technological growth and productivity, complementing native workers rather than displacing them, and, in turn, creating broader opportunities for all classes of workers.

While overall impacts are primarily neutral or positive, certain studies suggest nuanced distributional effects may occur in particular contexts. Highly educated immigrants may compete with native-born workers for certain roles, particularly with high-skilled individuals in the same field, exerting slight downward wage pressure in those narrow labor market segments (Borjas 2013). Research using survey data from doctoral recipients found that a 10% increase in foreign-born PhD graduates entering a specific field was associated with roughly a 3–4% reduction in wages for competing graduates, with part of the decline possibly resulting from more graduates being channeled into lower-paid postdoctoral positions for a longer period of time than would otherwise be the case (Borjas 2006). Similarly, modelling of labor market and academic publication data showed that an influx of 336 Soviet mathematicians after the collapse of the USSR crowded several niche mathematical subfields. Native-born mathematicians working in directly overlapping areas were significantly more likely to shift into new research fields, indicating competitive pressure (Borjas and Doran 2012). Notably, earlier immigrant cohorts are most likely to experience wage competition from new high-skilled arrivals. Using a structural labor-market model estimated with European data (Brücker et al. 2014), one study found that high-skilled immigrants tend to benefit native workers’ wages overall but can cause downward pressure on earnings for earlier immigrants in directly competing skill groups. Cases such as these may illustrate crowding out when high-skilled immigrants directly substitute for the roles of native-born workers or earlier immigrants in specialized occupations, with workers in such roles becoming more likely to transition into adjacent specialties. However, such effects tend to be localized and often temporary, and evidence often comes from older non-peer-reviewed or unpublished work (Aubry et al. 2026; Borjas and Doran 2012). More recently, an extensive meta-analysis of 88 studies (33 from the U.S.) found that, despite substantial heterogeneity in results across time, location, and study methodology, the effect of immigration on native-born wages is close to zero (Aubry et al. 2026).

Short-term effects can differ from long-term outcomes. An influx of high-skilled workers will increase labor supply, which can put downward pressure on wages in a narrow field for a period of time; however, over time, capital investment, firm expansion, and innovation stimulated by those workers tend to neutralize adverse wage effects (Brücker et al. 2014). Thus, market adjustments dilute the effects of crowded labor markets. As the PEFCI (2017) suggests, native-born professionals may shift toward complementary roles leveraging soft skills, management, or niches where language and cultural knowledge matter more, or pursue innovation in new areas, while firms expand to accommodate the larger talent pool. Conversely, filling high-tech roles with skilled immigrants can increase employment opportunities. For example, estimates from European and U.S tech industry employment data suggest that each high-skill job can lead to multiple new non-tech jobs as demand for local services rises (Goos et al. 2018; Moretti 2010). Indeed, a study examining employment data from 2000-2007 determined that, for every additional 100 foreign-born STEM workers with advanced degrees from U.S. universities, 262 additional jobs among native-born workers were created. (Zavodny, 2011).

Overall, the literature indicates that any negative impacts of high-skilled immigration on wages or employment are limited and concentrated among a specific industry segment, whereas the large majority of native-born workers experience either no harm, modest wage gains, or additional employment opportunities.

Innovation and Productivity

High-skilled immigrants have a well-documented positive impact on innovation in the U.S (Krol 2021). Over the past few decades, they have contributed between 23 and 32% of innovative outputs, including patents and startup firms, across the U.S. and up to 40% in some states such as California (Bernstein et al. 2022; Kerr and Kerr 2020). One landmark study using the 2003 National Survey of College Graduates found that immigrants patent at about double the rate of native-born Americans, chiefly because immigrants are more likely to hold science and engineering degrees (Hunt and Gauthier-Loiselle 2010). To test wider causal effects, the researchers analyze state-level patent activity alongside immigrant settlement patterns from 1940 to 2000. They estimated that a 1-percentage-point increase in the share of immigrant college graduates raises patents per capita by 9–18% (Hunt and Gauthier-Loiselle 2010). This study suggests substantial knowledge spillovers, whereby skilled immigrants rapidly invent new products and processes at high volume, increasing overall innovation output.

Immigrants are overrepresented among the highest-achieving individuals in science and technology. In fact, a higher proportion of U.S. Nobel Prize winners in the sciences have been foreign-born than native-born (Kerr 2013). Immigrants have received roughly 36% of Nobel Prizes awarded to Americans in chemistry, medicine, and physics since 1901 (National Foundation for American Policy 2023). Immigrants’ outsized impact on innovation is not due to an inherent capability advantage, but rather to U.S. immigration policies and self-selection, which lead many immigrants to concentrate in STEM fields with high innovation potential (Kerr 2013; Borjas 2014).

By bringing broad expertise in STEM research, high-skilled immigrants clearly augment the country’s inventive capacity. These contributions translate into higher productivity and economic growth. An influx of skilled workers increases the development of new ideas and efficient processes, thereby raising total factor productivity (TFP). Economists estimate that foreign STEM talent accounted for 30–50% of aggregate TFP growth in the U.S. between 1990 and 2010 (Peri et al. 2015). In other words, up to half of the nation’s productivity gains in recent decades can be linked to high-skilled immigrant labor – a striking demonstration of their impact on the country’s technological progress.

In the healthcare and academic sectors, the contributions of high-skilled immigrants, particularly as specialized physicians or medical researchers, generate meaningful economic value by improving health outcomes and productivity. Immigrant biomedical scientists and researchers play a key role in pharmaceutical and biotechnology breakthroughs, with many drug innovations and clinical interventions led by foreign-born experts (Morin et al. 2020). In fact, analyses of citation data show that foreign-born researchers in the U.S. are often more productive than native-born faculty in terms of research publications, reflecting an outsized contribution to the nation’s research output, including in health and life sciences (Gaulé and Piacentini 2013; Stephan and Levin 2001; Webber 2012).

This data strongly indicates that high-skilled immigration boosts per capita economic growth via increased innovation and productivity. The benefits of high-skilled immigration go beyond the immigrants themselves, raising the productivity of coworkers and the wider economy as ideas and innovations diffuse (NASEMCNS 2017).

Entrepreneurship and Business Formation

High-skilled immigrants are notably entrepreneurial and play a major role in establishing new businesses in the U.S. Immigrants are more likely than native-born Americans to launch companies, ranging from small local businesses to high-growth startups. In fact, immigrants or their children founded nearly 46% of Fortune 500 companies (American Immigration Council, 2024). One analysis of Census, American Community Survey, and matched monthly CPS data from 2007–2011 tracked individuals over time and showed that immigrants start businesses at higher rates than native-born residents. Despite comprising only 15.6% of the population, immigrants accounted for 24.9% of all new U.S. business owners (Fairlie and Lofstrom 2013). In the modern tech boom of recent decades, up to 16–25% of U.S. high-tech startups have at least one immigrant founder (Hart and Acs, 2011; Wadhwa et al., 2007)

As of 2022, high-skilled immigrants are estimated to have started more than half of privately held companies valued over $1 billion, often referred to as “unicorn” startups, which boost the economy by spurring innovation, creating jobs, and generating investment, revenue, and global competition. This proportion increases to nearly two-thirds when counting the children of immigrants who are founders of such companies (Anderson 2022). These statistics demonstrate the substantial contribution of immigrant entrepreneurs to U.S. innovation and job creation, with immigrant-founded companies playing a major role in economic growth and U.S. economic and technological leadership. Beyond the firms they personally start, high-skilled immigrants also appear to stimulate broader entrepreneurship and business dynamism in the regions where they settle. A 2024 study using administrative H-1B visa data and regional entrepreneurship measures applied an instrumental variables approach to show that new high-skilled immigrant arrivals are associated with significant increases in regional entrepreneurship over time, with evidence consistent with a causal effect. That is, doubling the number of new H-1B high-skilled immigrant workers in a city led to approximately a 6% increase in total new business registrations within three years (Tareque et al., 2024). Importantly, this effect was unique to high-skilled immigration. The study found no similar boost in entrepreneurship from inflows of less-skilled foreign workers. These results show that the presence of educated immigrants can expand opportunities for local entrepreneurs by introducing new ideas and networks, increasing the talent pool for startups, and often bringing specialized knowledge that spurs innovation in local firms. Knowledge transfer within immigrant communities may be one driver of this phenomenon. For example, the entrepreneurship boost from H-1Bs was most substantial in cities with established immigrant networks. Notably, areas with large Indian immigrant populations saw especially pronounced gains. In essence, skilled immigrants can create clustering effects that encourage native-born and other residents to start businesses, strengthening regional economic dynamism. Overall, high-skilled immigration results in a more vibrant startup ecosystem and elevated job growth, both directly through entrepreneurship and indirectly by spurring business formation among native-born and earlier immigrant populations.

Gross Domestic Product and Economic Dynamism

By expanding the skilled labor supply and spurring innovation, high-skilled immigrants make a substantial contribution to gross domestic product (GDP) growth and general economic dynamism in the U.S. Indeed, a comprehensive review of studies examining the economic impact of high-skilled immigration concluded that, not only does high-skilled immigration increase the human capital of the host country, but such immigration also has an unambiguously positive impact on the growth rate in the host country (Drinkwater et al. 2003). While immigration naturally increases total GDP by enlarging the labor force and population, economists focus on its per capita effects, and high-skilled immigration is typically associated with positive outcomes on this measure (NASEMCNS 2017). This positive per capita effect is partly due to how immigrants improve labor allocation and the economy’s flexibility. Research shows that immigrants are highly responsive to regional labor demand. They move to areas with growing industries and job openings more readily than native-born workers, expanding industries and the labor force in such areas, and helping labor markets adjust more quickly to changes in economic demand (Borjas 2001; Cadena and Kovak 2016; Somerville and Sumption 2009). For example, economist George Borjas examined U.S Census data from 1950 to 1990 to observe how regional labor markets are related to the geographic distribution of immigrants and native workers. Borjas found that immigrants disproportionately settle in states with higher wages for their skills, thereby helping to fill labor shortages and equalize wage differences between regions (Borjas 2001).

This mobility raises overall economic efficiency and output. In effect, these immigrant newcomers tend to relocate to regions with strong labor demand, such as technology hubs or locations with healthcare-related workforce shortages, enabling those regions to expand faster than they otherwise could. High-skilled immigrants often fill critical skill gaps in software engineering or medical specialties in rural hospitals, boosting productivity and output in those sectors (Batalova 2023; Rovito et al. 2021). Native-born workers, who are generally less mobile on average, benefit from this because it reduces labor-market constraints. Borjas’s theoretical labor-market models concluded that immigrants’ tendency to concentrate in higher-wage regions improves efficiency and raises GDP relative to a scenario in which immigrants mirror the geographic distribution of native-born workers. As noted above, high-skilled immigrants additionally contribute to innovation, with patenting activity by foreign-born college graduates increasing U.S. GDP by 1.4-2.4% during the 1990’s (NASEMCNS 2017).

High-skilled immigrants likewise contribute to economic dynamism by increasing the diversity of ideas and fostering global business linkages through trade and investment ties to their home countries (Kerr 2013). They also increase consumer demand. Although some of their earnings may be remitted abroad, immigrants still spend a significant share of their income in the U.S. on housing, food, transport, and other services (Gelatt 2024). Alongside facilitating entrepreneurial activity, economic efficiency, and output, these factors make high-skilled immigration integral for GDP growth, higher living standards, and a dynamic, adaptable economy.

Limitations

This review has several limitations that should be acknowledged when interpreting its conclusions. First, the evidence synthesized here is drawn from a narrative review rather than a systematic or meta-analytic approach. Although a broad and diverse body of high-quality literature was examined, the review does not claim to capture all relevant studies exhaustively, nor does it apply formal inclusion or quality-weighting criteria. As a result, the conclusions reflect the balance of evidence identified rather than a statistically pooled estimate.

Likewise, certain limitations exist in the literature itself. For example, causal inference is still a challenge across much of the literature reviewed. Many studies rely on observational data, exploiting regional, sectoral, or temporal variation in immigrant inflows, which can be confounded by reverse causality or unobserved local characteristics. Although several studies attempt to account for these issues using instrumental variables, past settlement patterns, or lagged designs, such approaches cannot entirely rule out spurious associations (Drinkwater et al. 2003; Fairlie and Lofstrom 2013; Hunt and Gauthier-Loiselle 2010; Tareque et al. 2024). Situational or environmental confounders may also create bias in such observational economic research. For example, policy changes or constraints, such as the H-1B visa cap, may lead firms to offer offshore jobs, or immigrants might go elsewhere, obscuring the actual impact under a more open system.

Conclusion

Notwithstanding these caveats, the evidence shows that high-skilled immigrants are net contributors to the U.S. economy. Taken together, the evidence from this review indicates that, over the long term, the effects of immigration on native-born workers’ wages and employment appear, on balance, positive. High-skilled immigrants have become key engines of innovation, entrepreneurship, and productivity growth, ultimately raising GDP and living standards. They fill specialized workforce gaps in technology, healthcare, and academia, start businesses at high rates, and help the U.S. maintain a dynamic, competitive economy. Notably, the positive impacts tend to accumulate over time. Looking ahead, preserving a stable pipeline of talent while reducing barriers to integration and upholding fair labor standards will be necessary to maintain U.S. economic growth and dynamism.

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