Who Emigrates From Denmark?

Ilpo Kauppinen, Panu Poutvaara, and I have just finished a paper that examines the selection characterizing emigrants from Denmark, one of the richest and most redistributive European welfare states.

The paper makes a neat theoretical contribution. It derives the conditions that determine whether the skill distribution of the emigrants stochastically dominates (or is stochastically dominated by) the skill distribution of the stayers. Because the rewards to skills in Denmark are low (relative to practically all possible destinations), the model predicts that the emigrants will be positively selected, and that the skill distribution of the movers will stochastically dominate that of the stayers.

Our analysis of administrative data for the entire Danish population between 1995 and 2010 strongly confirms the implications of the model. Denmark is indeed seeing an outflow of its most skilled workers. And that is one of the consequences that a very generous welfare state must learn to live with.

The paper is forthcoming in the Economic Journal.

Chinese Graduate Students And The Productivity Of Their Advisors

Kirk Doran, Ying Shen, and I have just finished the final draft of our paper that looks at how the increase in the number of Chinese graduate students affected the productivity of their advisors in American universities. I can’t believe it’s been 9 years since Kirk and I met and began to collaborate on what turned out to be a very productive research project that examined various aspects of the productivity of professional mathematicians. (See here,  here,  here, and here, for some of the papers we’ve already published).

The Cultural Revolution destroyed the Chinese higher education system and China sent few students to doctoral programs abroad during those years. There was a pre-existing body of Chinese-ethnic scientists in the United States, but the flow into this group was virtually halted. After 1978, Deng Xiaoping’s reforms encouraged Chinese students to acquire their graduate training in Western universities. This policy shift led to a huge increase in the number of Chinese students studying in doctoral programs abroad, and particularly in American universities.

china-opening

Our paper measures the impact of this supply shock on the productivity of their advisors in the discipline of mathematics, and the figure neatly summarizes our key findings. The number of papers published by American advisors with Chinese ancestry increased substantially after the opening up of China. Because of “ethnic complementarities,” a tendency for the Chinese students to be mentored by Chinese-American advisors, the supply shock opened up many new sources for research collaboration for these advisors, resulting in more published papers.

The supply shock also affected the American advisors who did not have Chinese ancestry. The relatively fixed size of mathematics graduate programs virtually guarantees that American graduate students were crowded out by the Chinese students. The departments that attracted most of the Chinese students were ethnically “mixed” departments–a  Chinese-American mathematician was present in the department actively advising students prior to the opening of China. There was an obvious drop in the productivity of the American (i.e., non-Chinese) advisors employed in the mixed departments most affected by the supply shock. Those advisors experienced a decline in the number of students they mentored and in the number of papers they published.

The lesson is obvious, but worth emphasizing repeatedly. As is typical with supply shocks, there are winners and losers. In fact, there are winners and losers even when there are very sizable ethnic complementarities that benefit a particular segment of the scientific workforce.

The paper is forthcoming in the Journal of Human Resources.

High-Skill Immigration: The H-1B Program

In previous posts (here and here), I argued that we should care about high-skill immigration because of the possibility that high-skill immigrants import knowledge and capabilities that “rub off” on the rest of us, thereby increasing our productivity. I also showed that there is evidence for such spillovers in the “experimental” context (such as the sudden dismissal of renowned Jewish scientists by the Nazi regime), but the evidence is restricted to cases where the immigrants have exceptionally high skills, where there is close personal contact between the exceptional immigrants and the native workers, and where the number of high-skill immigrants is sufficiently small relative to the market.

Obviously, such flows of truly exceptional immigrants are rare. The political argument for high-skill immigration is instead presented in the context of something like the H-1B visa program, which allows employers to import 65,000 (mostly) high-tech workers annually. In the H-1B context, “high skills” typically mean that the immigrant has at least a college degree.

Continue reading “High-Skill Immigration: The H-1B Program”

High-Skill Immigration: Experimental Evidence

A couple of weeks ago I promised to summarize the evidence on whether high-skill immigration generates the productivity spillovers that would produce large economic gains for natives. I apologize for taking so long to get back to this discussion, but I have so many other projects on my plate these days that it’s hard to keep up.

By far the most convincing studies that attempt to document the existence of spillovers are those that look at natural experiments. In a series of important papers, Fabian Waldinger has looked at what happened in Nazi Germany after Hitler fired all the Jewish professors . In 1933, shortly after it took power, the Nazi regime passed the Law for the Restoration of the Professional Civil Service, which mandated that all civil servants who were not of Aryan descent be immediately dismissed. That meant that Jewish professors like John von Neumann, Richard Courant, and Albert Einstein were fired from their university posts. Many of these stellar scientists found jobs abroad, particularly in the United States.

In his 2010 JPE paper, Waldinger showed what happened to the productivity of the doctoral students stranded behind in German universities after their exceptional mentors were dismissed. The productivity of the students stranded behind in the departments most affected by the dismissals suffered. In his 2012 RESTUD follow-up paper, Waldinger looked at what happened to the productivity of the colleagues of the dismissed scientists. The surprising answer is: Not much.

Continue reading “High-Skill Immigration: Experimental Evidence”

Why Is High-Skill Immigration Beneficial?

A few days ago I was having a discussion about high-skill immigration with some people who should know better. It suddenly struck me that even though everyone favors more high-skill immigration, there is a lot of confusion about why one should be in favor of it.

Suppose all workers are alike. (This is not a trivial assumption, but the argument pretty much carries through if we allowed workers to be different; it’s just harder to explain. I’m also going to focus on the productivity effects of high-skill immigration and ignore the important fiscal impact on the welfare state).

In the textbook model of the labor market (read: supply and demand), immigrants enter the country, and the wage falls in the short run. It is this wage drop that generates the “immigration surplus”–the increase in the size of the economic pie accruing to natives. Over time, the economy adjusts–firms expand, for example–and the wage goes back to what it was in the pre-immigration era (assuming constant returns to scale), and the immigration surplus dwindles down to zero.

Note I said nothing about whether workers are low-skill or high-skill. Regardless, the wage of competing workers falls in the short run, the economy adjusts over time, the wage goes back to what it used to be, and the immigration surplus disappears.

In order for high-skill immigration to be beneficial in the long run, we need to deviate from this textbook model. The deviation that will do the trick is that high-skill immigrants generate “productivity spillovers.” In other words, “we” natives learn stuff from them, becoming more productive in the process. It is this rubbing off of what high-skill immigrants possess that makes high-skill immigration beneficial.

Is there evidence proving the existence of such spillovers? In some cases of high-skill immigration: Yes. In other cases: No. Over the next few posts, I will summarize what I think is the strongest evidence in favor of such spillovers, and why that evidence may not really say all that much about the impact of the type of high-skill immigration we have in mind when we talk about changes in immigration policy.