Immigration, Innovation, and Growth
Stephen J. Terry, Thomas Chaney, Konrad B. Burchardi, Lisa Tarquinio, Tarek A. Hassan
American Economic Review · 2026 · Volume 116 · Issue 3
Abstract
We propose a novel identification strategy to isolate exogenous immigration shocks across US counties, by interacting quasi-random variations in the composition of ancestry across counties with the contemporaneous inflow of migrants from different countries. We show a positive causal impact of immigration on local innovation and wages at the five-year horizon. The positive dynamic impact of immigration on innovation and wages dominates the short-run negative impact of increased labor supply. A structural estimation of a model of endogenous growth and migrations suggests the increased immigration to the United States since 1965 may have increased innovation and wages by 5 percent.
Keywords
Economics of Minorities, Races, Indigenous Peoples, and Immigrants, Non-labor Discrimination, Time Allocation and Labor Supply, Wage Level and Structure, Wage Differentials, Geographic Labor Mobility, Immigrant Workers, Innovation and Invention: Processes and Incentives, Regional Economic Activity: Growth, Development, Environmental Issues, and Changes, Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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