Skilled Immigrants Boost Entrepreneurship and Create Jobs, a New Study Says
A growing body of research is reshaping our understanding of the role skilled immigrants play in the U.S. economy. Contrary to the common belief that immigrants take jobs from native-born workers, recent studies reveal that these individuals are actually fueling regional economic dynamism by starting new businesses and fostering innovation.
High-skilled immigrants, particularly those with H-1B visas, are emerging as strong contributors to new business formation. One influential study found that when the number of H-1B immigrants in a metropolitan area doubled, the number of new businesses increased by 6% within three years. This effect was observed even after controlling for the quality of entrepreneurship, meaning these immigrants are not just starting more businesses—they are also founding more high-potential companies.
The positive impact is unique to newly arrived high-skilled immigrants. The effect was noted specifically among new H-1B arrivals, not among continuing H-1B holders already living and working in the U.S. Similarly, the arrival of less skilled, temporary workers on H-2B visas did not produce a comparable entrepreneurial boost.
The research suggests that skilled immigrants drive entrepreneurship by facilitating knowledge transfer. Regions with larger communities of immigrants from the same country—so-called “immigrant enclaves”—experience even greater entrepreneurial activity, likely due to robust social networks and the efficient exchange of ideas and resources.
Immigrants are overrepresented among U.S. entrepreneurs. Nationwide, immigrants make up about 14-15% of the U.S. population but account for over 20% of entrepreneurs—rising to nearly 29% by 2020, according to several surveys and business databases. In high-tech and venture-capital-backed startups, the share of immigrant founders can exceed 40%.
The frequent argument that foreign-born talent simply displaces native workers is not supported by the evidence. Instead, the presence of skilled immigrants correlates with more jobs, more companies, and heightened innovation, rather than increased unemployment for natives.
In summary, high-skilled immigrants act as a powerful engine for U.S. entrepreneurship and job creation, particularly when they are newly arrived and can draw on existing social networks within local immigrant communities. Rather than intensifying job competition, they expand the economic pie, introduce new technologies and knowledge, and are consistently more likely than native-born Americans to launch high-growth startups. These fresh findings challenge the notion that skilled foreign workers undercut domestic opportunity; instead, they highlight skilled immigration as a vital force for regional and national economic vitality.
The Role of Immigrant Communities and Knowledge Transfer in Driving Economic Growth
The study further emphasizes the critical role of immigrant communities and knowledge transfer in fostering entrepreneurship. Regions with larger immigrant enclaves, where communities of immigrants from the same country cluster together, experience even greater entrepreneurial activity. These enclaves facilitate robust social networks and efficient exchange of ideas and resources, creating a fertile ground for startups and innovation.
One of the key mechanisms through which skilled immigrants drive entrepreneurship is by facilitating knowledge transfer. This process not only benefits the immigrant community but also spills over into the broader economy, leading to heightened innovation and job creation. The presence of skilled immigrants often introduces new technologies, skills, and perspectives, which can inspire native-born workers and entrepreneurs alike.
The study also highlights that the positive impact of skilled immigrants is not limited to specific industries. While they are overrepresented in high-tech and venture-capital-backed startups, their contributions are evident across a wide range of sectors. For instance, in high-tech industries, the share of immigrant founders can exceed 40%, according to several surveys and business databases.
Furthermore, the research underscores the importance of newly arrived high-skilled immigrants in driving these positive economic outcomes. The effect of H-1B immigrants on entrepreneurship is particularly pronounced among new arrivals, as opposed to those who have been living and working in the U.S. for an extended period. This suggests that fresh perspectives and the energy of new arrivals play a significant role in stimulating economic dynamism.
The findings also challenge the common misconception that skilled immigrants displace native-born workers. Instead, the evidence suggests that the presence of skilled immigrants correlates with more jobs, more companies, and heightened innovation, rather than increased unemployment for natives. This is because immigrants often create new opportunities by starting businesses and hiring workers, both native-born and immigrant alike.
In addition to their direct contributions to entrepreneurship, skilled immigrants also play a crucial role in expanding the economic pie. By introducing new technologies, knowledge, and ideas, they help to create a more vibrant and competitive economy. This, in turn, benefits not just the immigrant community but also the broader population by leading to higher wages, better products, and improved services.
Overall, the study provides strong evidence that skilled immigration is a vital force for regional and national economic vitality. By fostering entrepreneurship, innovation, and job creation, skilled immigrants contribute significantly to the U.S. economy, challenging the notion that they undercut domestic opportunity.
Conclusion
The evidence is clear: skilled immigrants play a pivotal role in driving U.S. entrepreneurship, innovation, and job creation. Contrary to the misconception that they displace native-born workers, skilled immigrants expand the economic landscape by founding new businesses, introducing fresh ideas, and fostering vibrant communities. The data underscores that newly arrived high-skilled immigrants, particularly those on H-1B visas, are key catalysts for economic growth, with their impact amplified by strong social networks within immigrant enclaves.
By facilitating knowledge transfer and introducing new technologies, skilled immigrants create opportunities that benefit both native-born workers and the broader economy. Their overrepresentation in startups, especially in high-tech industries, highlights their critical role in shaping the future of the U.S. economy. Rather than undermining domestic opportunity, skilled immigration emerges as a powerful engine for regional and national prosperity.
Frequently Asked Questions (FAQs)
How do skilled immigrants contribute to entrepreneurship in the U.S.?
Skilled immigrants contribute to entrepreneurship by starting new businesses, fostering innovation, and introducing new technologies. Studies show that a doubling of H-1B visa holders in a region can increase new business formation by 6% within three years, particularly in high-tech industries where immigrant founders are overrepresented.
What role do immigrant communities play in economic growth?
Immigrant communities, or “immigrant enclaves,” facilitate robust social networks and efficient knowledge transfer. These networks enable the exchange of ideas and resources, creating a fertile ground for startups and innovation. The presence of these communities amplifies the entrepreneurial activity driven by skilled immigrants.
Are skilled immigrants overrepresented among U.S. entrepreneurs?
Yes, skilled immigrants are overrepresented among U.S. entrepreneurs. While they make up about 14-15% of the U.S. population, they account for over 20% of entrepreneurs and nearly 40% of founders in high-tech and venture-capital-backed startups.
Do skilled immigrants displace native-born workers?
No, the evidence suggests that skilled immigrants do not displace native-born workers. Instead, they create new jobs by starting businesses and hiring workers, both native-born and immigrant alike. Their presence correlates with more jobs, more companies, and heightened innovation.
Why are newly arrived skilled immigrants particularly impactful?
Newly arrived skilled immigrants bring fresh perspectives, new ideas, and energy to the economy. The study found that the entrepreneurial boost is most pronounced among new H-1B arrivals, highlighting the importance of fresh talent in stimulating economic dynamism.