Economic Impacts of High-Skilled Immigration

Kauhanen AnttiDeVaro Jed

Abstract

This brief examines the economic impacts of skilled immigration on firms, innovation, and labour markets. Research shows that skilled immigration generally has positive effects on firm performance, productivity, and innovation. Immigrant inventors play a crucial role in innovation, with evidence showing they produce a disproportionate share of patents and have positive spillover effects on native collaborators. Contrary to common fears, most studies find that skilled immigration does not negatively impact native workers’ wages or employment on average. In fact, it can benefit natives with complementary skills.

The availability of skilled immigrant labour also influences firms’ location decisions, with restrictions on immigration leading to increased offshoring of jobs. While the fiscal impacts of immigration are debated, traditional accounting methods suggest a positive fiscal impact for highly educated immigrants. However, these estimates often fail to account for indirect effects like productivity gains and innovation.

Overall, the evidence indicates that skilled immigration is a valuable tool for addressing productivity challenges and innovation needs, particularly in countries facing declining working-age populations.

Publication info

Results of research
The Attractiveness of Finland as a Location for Productive Companies and Talented People
Research group
Labour market and education
Series
ETLA Muistio - ETLA Brief 140
Date
28.10.2024
Keywords
Productivity, Innovations
ISSN
2323-2463
JEL
J61, J31, D24, 031
Pages
8
Language
en