Fact of the Week: H-1B Visa Workers Contribute to the Number of Issued Patents in the United States

Source: Brandon Recce, "Quantitative Analysis of the Impact of Highly Skilled Immigrant Workers on American Innovation " (paper in the 2021 5th International Conference on Software and e-Business, 2021).

Commentary: Immigrants have made substantial contributions to U.S. innovation but the policy debate on their impact on the U.S. economy has nevertheless continued. A study by Recce uses patent data from the United States Patent and Trademark Office, H-1B visa data from the United States Citizen and Immigration Services, college graduate data from the National Survey of College Graduates, and population data from the United States Census Bureau to further examine whether immigrants indeed contribute to U.S. innovation. In other words, Recce uses this data to determine whether the number of H-1B visa workers is associated with a higher number of issued patents in a state. The study found that the number of H-1B visa holders is highly correlated with the number of issued patents in a state from 2008 to 2019 with a Pearson correlation of 0.89.

The study further shows that the number of H-1B visa holders is likely causally related to the number of issued patents in a state. Using an econometric model, the author accounted for omitted variable bias and found a statistically significant relationship between the number of H-1B visa holders and the number of issued patents in a state for a specific year. Since an H-1B visa holder could submit a patent in the years after they have held a visa, the author introduced a time lag variable to the econometric model. The results for a one-year lag were statistically significant, meaning the more H-1B immigrants in a state in a year, the more patents issued in that state the following year. Moreover, the author introduced an instrumental variable, the number of foreign college graduates per region, to control for confounding variables that affect both the number of issued patents and H-1B visa workers. The results were statistically significant, indicating a causal relationship between the number of H-1B holders and issued patents. Delving into the data, the study concluded that H-1B visa workers contributed most to the computer science and optoelectronics sectors. Given these results, the author concludes by noting that the United States should "consider improving the current [H-1B] system or implementing a new one" that will fix issues H-1B visa workers face.