The Effect of Immigration on Productivity: Evidence from U.S. States

Innovation and Economic Growth

Article Snapshot

Author(s)

Giovanni Peri

Source

Review of Economics and Statistics, Vol. 94:1, pp. 348–358, MIT Press, 2012

Summary

U.S. states receiving large immigration flows had stronger investment and growth than those that had small inflows.

Policy Relevance

Attracting immigrants, especially highly educated ones, is a strategy to increase employment, investment and productivity in a local economy.

Main Points

  • This paper analyzes the long-run impact of immigration on employment, investment and productivity in U.S. states from 1960 to 2005.
     
  • There is no evidence that immigrants crowded-out employment. At the same time, immigration had a strong positive association with investments and with total factor productivity (TFP).
     
  • These results are consistent with the idea that immigrants promoted efficient task specialization, thus increasing TFP, and they also promoted the expansion of the economy via investments.

 

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