Does migration policy push innovation? Yes, it does!

Highly-skilled migrants seem the solution for European needs in terms not only of growth but also for innovation.

Does research provide evidence for this general impression?

Measuring innovation is very complex. Two proxies are used to measure innovation in production: the registration of patents; and total factor productivity.

The registration of a patent at the national or European level is done only if there is the intention of implementing the innovation, because it is very costly: thus the number and the citation of patents are used to capture the innovative behavior of firms.

Total Factor Productivity captures, instead, the unexplained effect on growth in production, which cannot be attributed to the increases in production inputs, and that capture the final effect of innovation.

The research was carried out along two broad lines:

  • A first strand of research focuses upon the production of patents directly by foreigners. Thus it looks at the effect of more open legislation that favour the entrance of foreign migrants: e.g.  in the USA  H-1B visa policy, which facilitated  the entrance of highly-skilled foreigners with higher education in Mathematics and Sciences and  the variation in the number of patents registered by foreign nationals after the introduction of the norm.

        The conclusion is that the more open but specific  the visa policy is on highly skilled  in Science and Technology, the more patents will be registered by foreigners.

This strand of research is in favour of a more open highly-skilled migration policy. The result is, however, conditioned for the USA, which is a special case. The USA is able, in fact, to attract highly-skilled workers in  large numbers for the  wage premium offered , the high probability of highly-skilled jobs, as well as the language, English, which reduces the initial cost of migration, not to mention the open nature of American society. This also increases the return of a move, which frequently has started before in the education phase.

Thus the results related to the US should be taken cautiously in Europe because they are limited to a very favorable context where the internal mobility of firms is impressively large.

  • The second and broader direction of the research is, instead, upon the effect of migrant workers in the production at regional, sector or firm level on innovation measured both by patents and by TFP. The evidence in this strand of research is much broader with many country cases and international studies.

Highly-skilled migrants have a positive effect on the production or implementation of innovation. The analyses at local level show that diversity in national origin of workers leads to a positive impact. This though disappears at sector or frequently at firm level.

The diversity measure is very challenging because it is not only the total amount of migrants, but also its composition that is relevant for innovation.

If, on the one hand, the diversity index comes from the idea that there are complementary skills among migrants from different national backgrounds, the lack of strong evidence at firm and sector levels suggests a likely penetration of migrants of different origins in different sectors. These complement each other in the innovation process. More research in this field should be carried out to direct migration policy properly.

Any migration policy which favours the entrance of foreign citizens is thus beneficial, in general, for innovation at territorial, sector and firm level. The results on the beneficial effects of diversity are not yet universal and there is not enough evidence to justify changing the point system, which concentrates on the quality of the migrant- for  a quota system which selects by nationality.

The general conclusion is that inflows of highly-educated migrants favour innovation but also the variety of origin of the migrants can play a positive role at least at the regional level. Thus a more open migration policy for the highly-skilled will prove positive for innovation.

 

For more, see the MPC Policy Brief Innovation and Human Capital: the Role of Migration (Venturini A., 2013)

By Alessandra Venturini, Deputy Director of the Migration Policy Centre and Professor of Political Economy at the University of Turin

The views expressed by the author are not necessarily the views of the Migration Policy Centre

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