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Study: Immigrants Create Hi-Tech Firms, Not Take Jobs From Americans

In a new study, researchers from Duke University, the University of California-Berkeley, and the Kauffman Foundation show that there is a strong correlation between educational attainment in the STEM disciplines and innovation among immigrant founders of U.S.-based engineering and technology companies.

The authors say that “Education, Entrepreneurship and Immigration: America’s New Immigrant Entrepreneurs, Part II” follows the earlier report which showed that immigrants are helping to create more jobs in the hi-tech business, instead of taking away jobs from American workers.

 The researchers used the D&B Million Dollar Database to obtain a listing of 2,054 hi-tech companies founded during 1995-2005, of which around 500, or 25.3 percent, were founded by immigrants. The companies had more than $1 million in sales, 20 or more employees, and company branches with 50 or more employees. Out of the 500 companies, 144 were surveyed and it was found that 96 percent of founders held bachelor’s degrees, 47.2 percent held master’s degrees and 26.8 percent held a doctorate degree. More than half (53 percent) of the immigrant founders completed their highest degrees from U.S. universities.

“Census data shows immigrants are better educated than average Americans,” says Vivek Wadhwa, co-author and adjunct professor at the Pratt School of Engineering. “No one can refute this data. If the U.S. wants to be a world leader in technology and innovation, then we have to support them.”


 The study also found that very few immigrant founders came to the United States with the intention of starting a new company. Around 52 percent came to study, 39.8 percent came for  a job opportunity and only 1.6 percent for the sole purpose of entrepreneurship. Immigrants from India, China and Taiwan were interviewed for the survey, but Indians founded more companies than any other group combined.


Dr. AnnaLee Saxenian, dean and professor at Berkeley’s School of Information, says that in places like Silicon Valley the impacts of immigrant social and technical networks are well documented. Saxenian wrote an earlier report in 1999 which found that Chinese and Indian engineers led 24 percent of the technology companies in the Silicon Valley created between 1980 and 1998.

“As foreign-born engineers start businesses, they collaborate with former classmates and colleagues from their home countries, sharing the business contacts and know-how as well as market information that support entrepreneurial success,” Saxenian says. “Successful entrepreneurs not only contribute to the regional economy, but also become powerful role models and mentors, attracting subsequent generations of immigrants to the area.”

Immigrants add to the labor supply but they also bring their own capital, says Lawrence M. Kahn, professor of labor economics and collective bargaining at Cornell University. “There is a large number of immigrants in the labor market who are either college graduates or high school dropouts… and there is a disproportionate number who are dropouts,” Kahn says.

An official at the Center for Immigration Studies, a Washington, D.C.-based nonprofit, says the Duke study is “unremarkable and predictable.”

“It simply reflects the overall population demographic,” says Jessica Vaughan, a policy analyst at CIS. “It’s a stretch to say that they [the immigrant founders] create jobs instead of taking away jobs from American skilled workers. Could Americans have done just as well if they were given the same opportunity? The number of American students in STEM fields is going down and it’s tough to prove what’s causing that… I am not sure what you can conclude from the study because they are repeating something we already know.”

Caroline Espinosa, a spokeswoman from NumbersUSA, says the lobby group doesn’t want to stop immigration.

“We would like to see policy that helps kids in the U.S. pursue in these areas of education. If you import too many high-skilled workers from outside the U.S., you desensitize kids from not pursuing fields in science and engineering,” Espinosa says.

What researchers and lobby groups do agree on is that the study should not factor in the current debate on immigration, which provides a path to legalization for millions of immigrants here illegally, and an increases a cap on the H1-B worker program. Last week, Senate Majority leader Harry M. Reid, D-Nev., stopped the measure because of bipartisan gridlock, but President Bush on Monday said he would continue to look for a compromise to pass the Comprehensive Immigration Reform Act of 2007.

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