Foreign Stem Workers and Native Wages and Employment in U.S. Cities

44 Pages Posted: 6 May 2014 Last revised: 30 Sep 2014

See all articles by Giovanni Peri

Giovanni Peri

University of California, Davis - Department of Economics

Kevin Yang Shih

Rensselaer Polytechnic Institute (RPI)

Chad Sparber

Colgate University - Economics Department

Date Written: May 2014

Abstract

Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are fundamental inputs in scientific innovation and technological adoption, the main drivers of productivity growth in the U.S. In this paper we identify the effect of STEM worker growth on the wages and employment of college and non-college educated native workers in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogeneous increase in STEM workers across U.S. cities, we use the distribution of foreign-born STEM workers in 1980 and exploit the introduction and variation of the H-1B visa program granting entry to foreign-born college educated (mainly STEM) workers. We find that H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college educated natives. Wage increases for non-college educated natives are smaller but still significant. We do not find significant effects on employment. We also find that STEM workers increased housing rents for college graduates, which eroded part of their wage gains. Together, these results imply a significant effect of foreign STEM on total factor productivity growth in the average US city between 1990 and 2010.

Suggested Citation

Peri, Giovanni and Shih, Kevin Yang and Sparber, Chad, Foreign Stem Workers and Native Wages and Employment in U.S. Cities (May 2014). NBER Working Paper No. w20093. Available at SSRN: https://ssrn.com/abstract=2432835

Giovanni Peri (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

Kevin Yang Shih

Rensselaer Polytechnic Institute (RPI) ( email )

Troy, NY 12180
United States

Chad Sparber

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States

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