- 31 Jan 2017
- Research & Ideas
Why These Business School Professors Oppose Trump's Executive Order on Immigration
More than 14,800 professors at United States colleges and universities —including some 50 Nobel laureates— signed a petition opposing President Donald Trump’s Executive Order on immigration. Signatories from Harvard Business School explain their opposition. Open for comment; 0 Comments.
- 05 Jan 2017
- Working Paper Summaries
High-Skilled Migration and Agglomeration
Individuals with valuable skills have a higher propensity and offers to migrate both domestically and abroad due to the exceptional returns they can earn. Yet not all potential destinations are equally attractive in their professional and social opportunities. This review provides an in-depth analysis of available data and introduces several newly available data sources that are open to researchers. The patterns of high-skilled migration are quite consistent with agglomeration economies, such as the broad flows from a large number of source countries to very few destination countries. These data further show that migration selection processes for skill are becoming sharper and increasingly involve female migrants.
- 18 Nov 2016
- Working Paper Summaries
Innovation Network
Despite recent advances that measure how the technological development processes in innovative fields link with each other, our understanding of how progress in one technological area links to prior advances in upstream technological fields has been limited. The authors’ analysis and mapping of 1.8 million U.S. patents and their citation properties shows that a stable innovation network acts as a conduit for a cumulative process of technological and scientific progress. Upstream technological developments play an important role in the future pace and direction of patenting in downstream fields. This finding implies that if R&D slackens in one period the effects will still be felt years later in downstream fields.
- 20 Oct 2016
- Working Paper Summaries
Global Talent Flows
Global migration patterns have become increasingly asymmetric and skewed along several dimensions, especially as skilled migration has become a greater force globally. This paper first surveys the landscape of global talent mobility, including under-appreciated features like the rising importance of the migration of talented women. The review next discusses the causes and consequences of high-skilled migration and the particular role of agglomeration/cluster economies. Rather than having migration reduce the incentives for others to migrate to a location, agglomeration effects for talented workers often serve to instead heighten the incentives for future talent to migrate as well (e.g., Hollywood). The paper next discusses the role of national “gatekeepers” in global talent flows, and contrasts the two main approaches taken by governments (i.e., points-based systems vs. employer-driven systems). While overall patterns will likely remain similar, different forms of high-skilled migration are likely to emerge and evolve.
- 31 Aug 2016
- Research & Ideas
One Quarter of Entrepreneurs in the United States Are Immigrants
Immigrants are 15 percent of the overall United States population, but they become entrepreneurs at a much higher rate, according to new research by William Kerr and Sari Pekkala Kerr. Open for comment; 0 Comments.
- 18 Aug 2016
- Working Paper Summaries
Immigrant Entrepreneurship
Immigrant entrepreneurship is a topic of key policy interest but one with few facts. The authors construct a data platform using US Census Bureau administrative data to provide new statistics on the patterns of business formation by immigrant entrepreneurs and on the medium-term success of those businesses. Immigrants account for around a quarter of US entrepreneurs, and this share has been increasing since 1995. Immigrant entrepreneurs display a stronger up-or-out dynamic that is typical of young firm growth than natives—they fail more frequently, but immigrant-founded firms that persist experience greater employment growth compared to their native counterparts.
- 09 Aug 2016
- First Look
August 9, 2016
Developers dig into open offices ... Analyzing a medical technology startup ... Tracking the progress of immigrant entrepreneurship.
- 07 Dec 2015
- Research & Ideas
Why Immigrant Workers Cluster in Particular Industries
Anyone who lives in an American city can see how immigrants tend to cluster in industries along ethnic lines. Professor William R. Kerr explains why, and what this means for the US economy. Open for comment; 0 Comments.
- 12 Nov 2015
- Working Paper Summaries
Social Networks, Ethnicity, and Entrepreneurship
This research looks at why entrepreneurs from certain ethnicities cluster in particular industries, such as Vietnamese nail care salons.
- 30 Jul 2015
- Working Paper Summaries
Networks and the Macroeconomy: An Empirical Exploration
Understanding the origin and amplification of business cycle shocks is central to macroeconomics and business dynamics. Idiosyncratic firm- or industry-level shocks could spread through a network of business interconnections in the economy, propagating and amplifying their initial impact. This paper focuses on input-output linkages as well as on connections through the geographic collocation patterns of industries. The paper shows theoretically and empirically how shocks can be grouped into those of demand- or supply-side origin, and that these two types of shocks propagate to neighboring industries in different ways. The work is useful for business leaders and policy makers seeking to understand how real-time events will impact near-term economic outcomes. Closed for comment; 0 Comments.
- 01 Dec 2014
- Working Paper Summaries
Financing Innovation
There is growing consensus that well-functioning financial markets play a central role in driving economic growth through their ability to spur technological innovation. In this paper for the Annual Review of Financial Economics, the authors ask how financial markets might actively shape the nature of R&D that is undertaken. They also examine how this may impact technological innovation and growth through the shaping of the ideas that are developed across firms. Drawing on a new but growing literature on the role that capital markets and financial intermediaries play in impacting firm-level innovation, the authors first elaborate on theoretical contributions regarding why financing R&D projects might be distinct from financing other types of projects and the channels through which financial intermediaries and capital markets can impact innovation. They then discuss empirical studies on financing innovation in mature firms, in particular the literature on how ownership and capital structure impact the amount and nature of innovation undertaken by firms. The paper also looks at innovation in startups and the growing literature on the effect that multi-stage financing has on innovation in young firms. Three main themes emerge: 1) A growing body of work documents a role for debt financing related to innovation. 2) A very active area of research has looked at "learning" across multi-stage financing. 3) There is strong interaction between financing choices for innovation and changing external conditions. Key concepts include: Financing constraints can be extensive in the context of firms engaged in R&D and innovation-with the ability to shape both the rate and the trajectory of innovation. Capital structure plays a central role in the outcome of innovations. Bank finance is an important source of finance, particularly for larger firms with tangible and intangible assets to pledge as collateral. Public markets may provide deep pockets but pose a set of agency costs that might be particularly harmful for firms engaged in exploration and novel innovations. There is a growing interest among academics and practitioners in the multi-stage financing of innovation, both in established firms and startups, and understanding the optimal contracts and policies that might stimulate innovation. Closed for comment; 0 Comments.
- 25 Aug 2014
- Working Paper Summaries
Agglomeration and Innovation
It is well known that population and economic activity are spatially concentrated or clustered. But why does innovative activity tend to occur in clusters? What is the best way to measure this concentration? And what is the economic impact of this concentration? The authors take up these and related questions in this paper, a chapter of the forthcoming Handbook of Regional and Urban Economics. They summarize recent literature on agglomeration and innovation and explore how it relates to economic performance and growth. They also discuss the difference between invention vs. innovation and how these forces are measured; review patterns of innovation and agglomeration; and describe formal theories linking agglomeration and innovation. The authors also discuss research on other factors that work to sustain agglomeration clusters, link global clusters together, promote large vs. small company innovation, and similar phenomena. Throughout, they highlight important areas for future research. Key concepts include: Empirical measurement in urban economic studies has made substantial strides forward in the last two decades, but much remains to be learned. We need better insight into the long-term lifecycles of innovative places. This is true within countries-innovation cores have shifted between Detroit, Boston, Silicon Valley, etc. and will continue to do so-but also true across countries. Many policymakers want to foster "the next Silicon Valley" type initiatives but they need better guidance. This is so in advanced economies, in nations currently looking to transition from resource dependence to a knowledge-based economy, in developing countries looking to leapfrog growth stages, and everywhere in between. Innovation comes in many shapes and sizes-except in economic studies. Ideally, future research will develop a richer accounting of the variations of innovation and how they related to the traits of clusters. Closed for comment; 0 Comments.
- 05 May 2014
- Working Paper Summaries
Firms and the Economics of Skilled Immigration
Firms play a central role in the immigration of skilled workers to the United States. In this paper the authors review the progress that has been made so far on understanding the impacts of high skilled immigration from the perspective of the firm. They discuss why an understanding of the economics of the firm is important, and emphasize the important degree to which firms internalize substitutions and complementarities over different worker groups and occupations. They then review recent academic work about firms and skilled immigration, and describe important areas for future research from both microeconomic and macroeconomic perspectives, respectively. Overall, the authors make clear that firms play an essential and active role in the skilled immigration process. In fact, the structure of the most important skilled immigration program allows firms to first choose the worker that they want to hire before the immigration to the United States occurs. The same importance is true for universities and students, who often become the workers later hired by firms (e.g., Stephan and Levin 2001, Stephan 2010). Given this policy framework, it is particularly valuable to understand exactly how these institutions choose to be a part of the immigration process, the role of the immigrants in their sponsoring institutions, and how these initial conditions persist for future assimilation of the immigrant. Key concepts include: The admission of high skilled workers is of deep importance to the United States, particularly with respect to fostering innovation. Some of the key arguments made about skilled immigration cannot be analyzed without departing from traditional frameworks of labor markets and focusing instead more specifically on firms. Firms, especially large and high-tech firms, have played a central role in this growth through their sponsorship of visas and effective selection of foreign workers. The structure of one of the most important skilled immigration programs is designed to allow firms to select the workers that they want to hire, rather than having these employees selected by the U.S. government. Economists have made tremendous strides over the past decade in identifying important unanswered questions about the impacts of skilled immigration. The development of greater data resources is the key next step for further progress on these important questions. Closed for comment; 0 Comments.
- 22 Jan 2014
- Research & Ideas
High-Tech Immigrant Workers Don’t Cost US Jobs
Hiring skilled immigrants by United States high-tech firms not only doesn't push out existing workers, it creates job opportunities for all, argues William Kerr. Closed for comment; 0 Comments.
- 05 Dec 2013
- Working Paper Summaries
Heterogeneous Technology Diffusion and Ricardian Trade Patterns
The principle of Ricardian technology differences as a source of trade is well established in the theory of international economics. This theory argues that countries can focus on producing products in which they have comparative productivity advantages; subsequent exchanges afford higher standards of living in all countries than are possible without trade. While a key theory, economists have struggled to quantify the empirical importance of comparative technology advantages and their link to trade. This is especially difficult given the high degree to which technology states of countries and industries can be correlated with other traits about countries that could also promote trade. This study contributes to scholarship on Ricardian advantages through the development of a substantially larger dataset than previously utilized and the study of changes in technology/trade over time. Even more important, the study provides a tool for isolating relative technology growth in exporting countries across industries. The foundation for this identification is the modeling of Ricardian advantages through differences across countries and their industries in terms of their access to the U.S. technology frontier. The differences arise due to historical migration patterns (e.g., Chinese migration to San Francisco versus Hispanic migration to Miami). The study analyzes how technologies flow differentially to countries and industries based upon the historical settlement patterns of migrants from countries and the spatial development of new technologies in the United States (i.e., which technologies flourished in San Francisco versus Miami). The study finds that these differential technology flows are powerful enough to influence world trade patterns, and in the process, they provide new identification to an age-old theory. Key concepts include: A core principle in international economics concerns trade among countries due to technology differences. While often this theory constitutes the first chapter in trade textbooks, empirical measurement of these relationships has been challenging. The empirical work in the study finds that comparative advantages are an important determinant of trade. Moreover, Ricardian differences are relevant for explaining changes in trade patterns over time. The study documents for emerging economies an economic consequence of emigration to frontier economies like the United States. Technology transfer from overseas migrants is strong enough to meaningfully promote exports from the home country. Beyond quantifying the link between technology and trade for manufacturing, this paper also contributes to research on the benefits and costs of emigration to the United States for the migrants' home countries (i.e., the "brain drain" or "brain gain" debate). Closed for comment; 0 Comments.
- 27 Nov 2013
- Working Paper Summaries
Skilled Immigration and the Employment Structures of US Firms
The immigration of skilled workers is of deep importance to the United States, particularly in occupations closely linked to innovation and technology commercialization. Appropriate policies and admissions levels for skilled workers remain bitterly debated in the popular press. The authors analyze how the hiring of skilled immigrants affects the employment structures of US firms. This focus on the firm is both rare and important, since economists typically study immigration through the conceptual framework of shifts in the supply of workers to a labor market; yet substantial portions of the US immigration framework have been designed to allow American firms to choose the immigrants that they want to hire. Young workers account for a large portion of such skilled immigrants; for example, 90 percent of H-1B workers are under the age of 40. Given this context, the authors look specifically at the role of young skilled immigrants within more than 300 large employers and major patenting firms over the 1995-2008 period. The evidence suggests that increased employment of young skilled immigrants 1) raises the overall employment of skilled workers in the firm, 2) increases the immigrant share of these workers, and 3) reduces the older worker share of skilled employees. The latter effect is evident even among natives only. Overall, these results provide a multifaceted view of how young skilled immigration shapes the employment structures of US firms. There are significant implications for the competitiveness of American firms, the job opportunities of natives and immigrants employed by these firms, the larger national innovative capacity of the United States, and much beyond. Key concepts include: Many parts of the US immigration process for skilled workers operate outside of formal markets and provide a central role to firms (e.g., sponsorship of H-1B workers). As such, firms need to take a much bigger role in immigration research going forward. Consistent evidence links the hiring of young skilled immigrants to greater employment of skilled workers by the firm, a greater share of the firm's workforce being skilled, a higher share of skilled workers being immigrants, and a lower share of skilled workers being over the age of 40. The results on whether total firm size increases or not are mixed. Employment expansion is greater for younger natives than their older counterparts. This tilting of the age structure of the firm (even in relative sense among skilled natives) with immigration is underexplored by economists. Departure rates for older workers appear higher for those in STEM (science, technology, engineering, and mathematics) occupations compared to younger workers. These results do not align with any single popular account and suggest that greater caution in public discourse is warranted. Closed for comment; 0 Comments.
- 19 Sep 2013
- Working Paper Summaries
U.S. High-Skilled Immigration, Innovation, and Entrepreneurship: Empirical Approaches and Evidence
In the 2008 Current Population Survey, immigrants represented 16 percent of the United States workforce with a bachelor's education. Moreover, immigrants accounted for 29 percent of the growth in this workforce during the 1995-2008 period. Exceeding these strong overall contributions, the role of immigrants within science, technology, engineering, and mathematics (STEM) fields is even more pronounced. Even so, the importance of the global migration of STEM talent has been under-studied. In this paper, which focuses exclusively on the United States' experience, the author reviews academic work regarding the effects of global migration on innovation and entrepreneurship. Findings show that while some aspects of the phenomenon are well understood, such as the quantity and quality of immigrants, scholars still have very little insight on others, such as return migration. Overall, immigration has clearly been essential for the United States' leadership in innovation and entrepreneurship. There is also evidence of positive impacts of high-skilled diasporas for home countries, although the ledger that can be measured in the United States remains incomplete. Key concepts include: Scholars are just beginning to trace out and quantify how the economy reacts to immigration. Academic research on low-skilled immigration has a longer history, and efforts to evaluate high-skilled immigration are just starting to define its unique attributes from general immigration (e.g., the impact of firm sponsorship of H-1B visas). In terms of quantity, immigrants generally account for about a quarter of the US workforce engaged in science, technology, engineering, and mathematics (STEM) fields. This share is growing rapidly. In terms of quality, most immigrants engaged in STEM work in the United States are better trained for this work than natives (e.g., chosen academic fields of study, levels of education obtained). Conditional on these education choices, immigrants and natives appear quite comparable in quality, with some greater potential for the "long tail" of superstars. Immigration is associated with higher levels of innovation for the United States. The short-run consequences for natives are minimal. However, this aggregate achievement involves some displacement of U.S. workers, and the long-run impact is less understood. Long-run estimates range from very positive to substantial crowding-out depending upon the study and technique. High-skilled immigrants promote knowledge flows and foreign direct investments to their home countries. It is still unclear whether this benefit fully compensates the country for the potential negative consequences from the talent migration. Closed for comment; 0 Comments.
- 26 Aug 2013
- Lessons from the Classroom
Built for Global Competition from the Start
Building a startup as a global business requires managers with skills and strategy much different from their predecessors of even a generation ago, says William R. Kerr. Closed for comment; 0 Comments.
- 09 May 2013
- Working Paper Summaries
Clusters of Entrepreneurship and Innovation
For many decades, the common wisdom among local officials pursuing employment growth for their areas was to attract a large firm to relocate. This "smokestack chasing" led to many regional governments bidding against each other and providing substantial incentives to large plants making their location choice decisions. The success of entrepreneurial clusters in recent decades, however, has challenged this wisdom, and now many policy makers state that they want their regions "to be the next Silicon Valley." This has led to extensive efforts to seed local entrepreneurship, with today's politicians routinely announcing the launch of an entrepreneurial cluster in a hot industry, such as biotechnology, nanotechnology, or advanced manufacturing. In this paper, the authors explore the rationale for and efficacy of policies to promote local entrepreneurship and innovation and reflect on recent initiatives in this domain. Key concepts include: Entrepreneurship is often linked to local economic growth, and economic theory provides rationales for why governments may want to support entrepreneurship and innovative activities in their local areas (e.g., spillover benefits to neighboring firms). Economic theory and practice also identifies potential pitfalls in these efforts. Policies supporting the emergence of clusters of small-scale entrepreneurs allow policy interventions to touch many entrepreneurship simultaneously, providing important scale to interventions, and appear to respect the empirical tendency of economic activity to cluster. Such approaches can also avoid the dangers of targeting specific firms for support. Despite this foundation and the tremendous current policy interest for entrepreneurship, the optimal formulation of entrepreneurship policy is not yet known. Indeed, relative to our understanding of how to craft policies for mature fields like international trade and monopoly, we have very little experience evaluating policies towards start-up clusters. The best path forward involves extensive experimentation and evaluation. Without advances in these dimensions, we cannot be confident that policies to promote entrepreneurship will have their intended impact. Closed for comment; 0 Comments.
Digital Labor Markets and Global Talent Flows
Digital labor markets aiInternet-based platforms connecting workers worldwide with companies seeking to have tasks completed. This paper describes the markets, evaluates their rise and global span, and reviews academic studies of how they function. It includes cases to suggest the range of ways in which digital capabilities extend access to talent over long distances.