The U.S. Is Crazy to Scare Skilled Immigrants Away

(Bloomberg Opinion) -- President Donald Trump has done a lot to scare high-skilled immigrants away from the U.S. He has made it harder for them to get green cards. He has blocked some foreign students from entering and discouraged others from working during school. He is considering banning the spouses of H-1b visa holders from working in the country at all. The harassment campaign appears to be working. H-1b applications are down, as is the number of visas being issued to overseas students:

It’s hard to see what this accomplishes other than whipping up enthusiasm from Trump’s anti-immigrant base. It stifles the flow of foreign students to the research universities that are the best hope for an economic revival in declining regions. It starves the tech industry of talented workers. It hurts native-born workers: Evidence suggests that skilled immigration actually raises wages for Americans of all skill levels, by strengthening the local tech industry. It drains government coffers, because skilled immigrants pay much more in taxes than they use in government benefits.

Nonetheless, some restrictionists seek an economic rationale. For example, on both the right and the left, opponents of skilled immigration have claimed that allowing the best and the brightest into the U.S. hurts developing countries by robbing them of badly needed talent. This is the so-called “brain drain” argument.

The argument has some superficial plausibility. Growth in poor countries like Bangladesh, Vietnam and Ethopia matters for global welfare. Therefore, while it might benefit the U.S. to have more smart Bangladeshis, Vietnamese and Ethiopians, putting their talents to use building next-generation factories in their home countries instead of designing apps for wealthy Americans seems like it would serve humanity better overall.

But this ignores all the good things that can happen to a developing country when its smart people move to the U.S. First of all, skilled immigrants and their diasporic descendants often invest in their ancestral countries -- providing not just capital but also rich-country ideas and technology. Sometimes, members of diasporas even move to their ancestral countries to start businesses, a phenomenon known as brain gain. Sociologist AnnaLee Saxenian has chronicled how this process has benefited countries such as China and India.

That’s not all. The number of educated people in poor countries isn’t fixed -- lots of smart people probably fail to get a good education because economic opportunities for graduates are so limited. Harvard Business School economist William Kerr has documented how, when the U.S. admits more skilled immigrants from a country, more people in that country tend to seek out higher education in the hope of emigrating, too. Many never make it to the U.S., but instead apply their skills in their home countries.

In other words, the U.S. can actually increase a country’s education level -- and boost its economy -- by taking in more of its educated people. A 2017 paper by economists Gaurav Khanna and Nicolas Morales theorizes that skilled immigration to the U.S. in the 1990s -- specifically, the boom in H-1b visas -- jump-started India’s information technology boom in the following decade. Noting that the IT industry jumped from 1.2 percent of India’s economy to 7.5 percent by 2012, the authors write:

Many [H-1b] workers returned to India…this educated workforce in India enabled the Indian IT sector to grow rapidly…and over time, India became a major producer of software[.]

Growth in India is one of the most important forces behind world poverty reduction. Thus, the U.S. probably did the human race a great service by welcoming high-skilled immigrants from India in the 1990s.

Now it’s time for the U.S. to do other countries a similar service. Nigeria, Ethiopia, Bangladesh, Indonesia and other poor countries have enormous reserves of under-used talent. Welcoming this talent is as close to a win-win policy as the U.S. will ever find.

To contact the editor responsible for this story: Mark Whitehouse at mwhitehouse1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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