Spillover Effects of High-Skilled Immigrants: A Case Study of Immigrants’ Impact on Metropolitan Areas in California

Abstract

The debate on immigration, both its benefits and detriments to the United States economy, endures among researchers and policymakers. Though classical economic theory would predict increases in immigration to decrease employment and wages for the native workforce, the bulk of empirical research has failed to corroborate that theory. This paper assesses the impact of immigrants on wages in the Metropolitan Areas where they work, specifically in California. I estimate hedonic wage and rent equations from individual workers and households and find evidence of externality gains from higher shares of highskilled immigrants—measured both by educational attainment and occupation. The positive influences associated with skilled immigrants raise questions as to the restrictive immigration policies surrounding high-skilled immigration. Specifically, this paper inspects the H-1B visa program, and recommends that the annual quota be raised in accordance with the Immigration Innovation Act of 2015. Additionally, this paper recommends the creation of a standing commission on labor and immigration to monitor changes in regional needs for skilled immigrants and provide timely policy recommendations to Congress regarding modifications to the quota.