The Role of Firms in Immigration and Economic Prosperity | Britta Glennon

Skilled Immigration Benefits the U.S. Economy

Dan Loney: The topic of immigration is on the minds of so many Americans right now, but it’s also a very important economic topic. Britta Glennon, an assistant professor of management, has researched the topic in the past, and she joins us here in-studio.

Britta, I think at times we almost forget how important immigration can be from an economic perspective.

Britta Glennon: Absolutely. I think a lot of the rhetoric is often around taking jobs or something like that. What’s often missed is how much they contribute to the economy. In terms of investment, in terms of innovation, in terms of entrepreneurship, there are so many dimensions on which they’re playing a really positive role in the economy that just doesn’t get talked about in the news.

Loney: You have done research rather recently about how immigration and firms connect. Take us through a little bit of what you’ve done.

Glennon: Yes, first of all, I really want to emphasize the importance of the role of the firm in immigration. I focus on skilled immigration. Skilled immigration visas are almost entirely sponsored by firms. Firms are the ones who select the individuals who get the visas. They do that entire process. They’re the ones who apply, and they’re the ones whom that immigrant is then tied to for the length of their visa.

Just from that perspective, they’re playing a really important role. But there are also other ways in which the firm really matters. Immigrants are 80% more likely than natives to start firms, for example. So, it’s not just the case that they are coming in and taking jobs or something like that. They are actually creating jobs through creating new startups.

They also attract a lot of FDI [foreign direct investment]. When you have an influx of immigrants, what often follows is companies from their home country, from their country of origin, will follow, so they’ll start setting up their own subsidiaries there. That, of course, also creates jobs.

When immigrants join firms, you can see within firms, there’s this complementary relationship with Americans, where when they come together, they’re more innovative. You get more patents, more innovation when immigrants and natives are coming together. That makes the firms that hire them actually perform a lot better, become more innovative, etc. So, there are all these different ways in which firms and immigrants are interacting that are really positive for the economy.

Loney: I found it interesting the impact with immigrants coming over on a visa, but there’s a corollary impact that occurs in that person’s home country, as well.

Glennon: Yes, absolutely. Some of this goes back to the investment piece. If, for example, there is a community of Swedish immigrants, then there’s going to be an increase in Swedish companies investing in that area. That has been well documented in the research. But it also goes the other way. If a company in the U.S. hires immigrants from a particular country — say, a particular company hires a number of Indian immigrants — they are going to perform better in India, and they’re going to be more likely to expand and invest in India.

That’s one of the ways that they really help firms, because they know a lot about, for example, how Indian government contracts work. Or they know about Indian consumer tastes, or things like that. There is this really strong positive relationship between hiring immigrants and the firm’s performance in that home country for those reasons.

Loney: There is also the component of having students come over to the United States to get their education, and what they do with their careers afterwards, correct?

Glennon: Yes, absolutely. If you think about H-1B visas, those are probably the best known skilled immigration visas, firms are often hiring students with those H-1B visas to come and work with them afterwards. What they’re coming with is a different experience than Americans have, and different ideas, different knowledge, different connections, and that’s bringing this new perspective into the firm and bringing new knowledge into the firm.

That’s one of the reasons why there tends to be a boost in innovation, for example, because innovation is often about the recombination of different ideas. So yes, absolutely, they are bringing that from their home countries, and that’s boosting firm performance and innovation.

U.S.-China Tensions Are Harming Global Science

Loney: In the paper, you also mention the research component that can sometimes be impacted in both countries.

Glennon: Yes. It’s not just within that firm in the U.S. where this could be happening, but also if you hire immigrants from a particular country, they may still be in contact with people in their home country, so you might end up with these cross-border teams producing new research. It really boosts global science and collaborations across different parts of the world.

Loney: Right now, one of the concerns is the “anti” sentiment. This will happen by different people against different immigrants coming here to the U.S. In terms of the research that you did, you found anti-Chinese sentiment factors when you looked at how Chinese scientists work here in the U.S.

Glennon: Yes, we found that some of the growing hostility towards China is policy driven. Some of that is a more organic, sort of negative sentiment in the U.S. That has really deterred Chinese students from coming to the U.S. We see that thousands of STEM PhD students from China have ended up not coming to the U.S. and are instead typically going to other Anglophone countries. It’s not that they are going back to China. They’re going to Canada or the U.K. or Australia or New Zealand, so we’re missing out on a lot of these top talents from China. If you care about something like national competitiveness, then that’s even more worrying because other countries are getting that talent instead of us.

Loney: I would assume that because relations between the U.S. and China are not great right now, that has an impact on future developments.

Glennon: Yes, absolutely. We’re really capturing only the tip of the iceberg in our paper because we stopped our study in 2019, which arguably is before the tensions really escalated. We’re already finding big effects in terms of fewer Chinese students coming to the U.S., fewer Chinese students staying in the U.S. We’re seeing a real productivity hit to ethnically Chinese researchers in the U.S., which obviously is really horrible. It’s not just a productivity hit, but some are dropping out of the workplace altogether.

The U.S.-China scientific relationship arguably has been the most important one in the world for a couple of decades now. There’s a huge amount of collaboration between scientists in both countries. There are huge amounts of Chinese students coming to the U.S. and learning, and that kind of knowledge transfer is really important for innovation, that recombination of ideas from different parts of the world. As those tensions increase, that circulation of ideas and people is going to continue to decline, and we’re going to lose out on what that collaboration was created for.

Loney: We’re not at war with China, but there’s a significant tension. Is it somewhat similar to what you might see in countries at war?

Glennon: Yes, that’s part of what sparked our interest in studying this. There has been some really phenomenal work documenting what happened to science during World War I, for example, when there was real, complete cutting off of collaboration between parts of the world, and really big detrimental effects. We were curious if you would still see that if it was just kind of these broader tensions. They are a little bit less dramatic because it’s not a complete cut-off, but they’re still quite significant.

Loney: You talk about that component of STEM. I guess 2016 was a year that we were seeing part of this shift, correct?

Glennon: Yes, that’s right. So we really see in the data the impact of these tensions starting to take off around 2016. We attribute it to a couple of things. This is around when at least some of the arrests of Chinese scientists started to take off. There was one very famous one, Xiaoxing Xi, who is a physicist at Temple here, who was arrested. It turned out he was not guilty on the belief that he was a spy for the Chinese government.

Then you had the Trump campaign, which very much painted China as the enemy. That’s when we start to see this negative sentiment against China growing. Then it gets even more solidified when you have the U.S.-China trade war. Then you have the China Initiative, which was the formalized version of arresting Chinese scientists for fear of espionage.

Loney: How much of a challenge is it right now with trying to build out a lot of these emigrational relationships between countries?

Glennon: We certainly can say that what we’ve found so far is probably a lower bound. I think it has gotten much tougher since then. It’s a little bit difficult empirically to tease that out, just because you have COVID and some other things going on. But at least from preliminary looks at the data, these effects are only getting bigger. We focus on U.S.-China in this one paper, but general negative sentiment towards immigrants overall is likely to have some of the similar effects, although we haven’t directly studied that.

Loney: I was going to ask if you can start to correlate it towards what we’re seeing against immigrants from other countries here in the United States. I think it’s probably a safe assumption.

Glennon: Yes, I have seen another paper, not mine, that documented a decline in international students at U.S. universities, and the types of students who are less likely to come are the highest quality ones because they have other options, right? So, we are already starting to see that in our universities.

Loney: Is there a next logical step for your research to go off of this?

Glennon: As always, research always spawns a million more questions than you can possibly answer. But one of the things that I think we would really like to look into are things like the China Initiative and this fear of espionage. They didn’t come out of nowhere, right? There has been a credible increase in espionage threats from the Chinese government. National security is not something that you want to completely brush aside, but our feeling is that it has spread much beyond national security. We’d really like to be able to tease out where it has gone beyond that. Just from a broader welfare perspective, how much of this is, “Well, maybe it’s OK, given the benefit of national security,” and where this is actually doing more harm than good.