Poster #103 - Foreign-born Human Capital, Innovation, and Economic Growth: Does State-Level Fiscal Policy and Economic Condition Matter?

• In Event: Saturday Poster Luncheon

Abstract

The United States (US) is the largest immigrant-receiving country in the world. Though in many ways the U.S. immigration policy is designed to incentivize high-skilled immigration, its intended and actual outcomes remain contested, complex, and poorly understood for informing policymaking.

Leveraging variation in state economic and fiscal conditions, the study examines whether high-skilled immigration influences innovation and economic growth at the U.S. state level and under what conditions these effects are strengthened. The analysis uses a 14-year state-level panel dataset comprising innovation, immigration, fiscal, economic, and political variables from seven different publicly available data sources. High-skilled immigrant labor is operationalized using H-1B certifications. Innovation and economic growth are measured using patent applications and gross state product (GSP), respectively.

Fixed effects models with robust standard errors and lagged specifications find that H-1B certifications are positively associated with patenting activity. Specifically, an increase of 100 H-1B certifications is associated with roughly 4 to 8 additional patent applications per 100,000 residents and about a $32 increase in GSP per capita. The positive effect of H-1B certifications on economic growth is stronger under higher innovation intensity. An increase of 100 patent applications per 100,000 residents increases the marginal effect of H-1B certifications on GSP per capita by about $26, and this interaction is statistically significant at the 5% significance level. In states with low to moderate fiscal reserves, H-1B certifications are associated with significantly higher patenting activity compared to states with stronger reserves. At the same time, economically strained states benefit more from the increased involvement of high-skilled immigrants in economic growth.

The study adds to the contemporary debate on the role of foreign-born human capital in economic growth and the management of immigrant-led innovation. Findings suggest that state governments, as active policymakers, can strategically leverage high-skilled immigration to promote innovation in fiscally constrained states and support economic growth in economically strained states.

Author

• Nabila Parijat, Georgia Southern University
  Presenting Author