In my best of 2019 review of Bryan Caplan’s book Open Borders: The Science and Ethics of ImmigrationI wrote:
While there are few people who would accuse Caplan of underestimating the benefits of imports, I am one of those few. Immigrants start businesses at twice the rate of native-born Americans. So, among the biggest beneficiaries of those immigrant workers, are American workers. However, nowhere in his book do I find any mention of that fact. It happens, of course, that this exceeds the benefits of the native Americans; think of a Korean dry cleaner that mostly hires other family members. However, it is likely that most of these employers employ non-family and non-immigrant workers.
It turns out that I also underestimated the immigration case. I say that because of this interview by my Hoover colleague and economist Steven Davis. He interviewed Rebecca Diamond, a professor of economics at Stanford University. Here’s the go-to:
Immigrants directly account for one-quarter of the economic value generated by US patents. They account for more than one-third of that amount after including the synergy benefits that immigrant founders bring to American-born founders. Immigrant inventors also play a major role in the two-way flow of scientific knowledge and technology between the United States and other countries. Stifling the flow of immigrant inventors would hamper American innovation and slow the development and dissemination of scientific knowledge.
Now, you might say, “But if the US government didn’t let many of those people in, wouldn’t they give them a patent somewhere else?” If so, we would still benefit.” (Remember that according to Nobel Prize-winning economist Willam D. Nordhaus, 97.8 percent of the profits from innovation go to consumers, not inventors.)
The answer is “No.” Some of them may be copyrighted elsewhere. But some of them wouldn’t have it. For all its imperfections and government obstacles, America still has the most dynamic economy in the world. Potential founders here have others around them to work with: think Silicon Valley. So if the government were to prevent large numbers of them from immigrating, it would prevent a large amount of innovation, and American consumers, as well as other consumers, would be deprived of the benefits of innovation.
Here is a link to the basic study.
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