Skilled Foreign Workers a Boom to Pay of Native College Graduates

choi

John Zumbrun and Matt Stiles, Study: Skilled Foreign Workers a Boom to Pay. Wall Street Journal, May 23, 2014.


which cites

Giovanni Peri, Kevin Shih, Chad Sparber, Foreign STEM Workers and Native Wages and Employment in US Cities. National Bureau of Economic Research, May 2014 (Working Paper No 20093)
www.nber.org/papers/w20093
(page 8: “Our preferred specifications reveal that a rise in the growth of foreign STEM by one percentage point of total employment increases growth in the wages of native college educated workers by a statistically significant 7-8 percentage points. The same change had a smaller but usually statistically significant effect on the wages of native non-college educated workers equal to 3-4 percentage points. No statistically significant effects were found for the growth of native employment. We also find that an increase in foreign STEM growth had a significantly positive impact on growth in housing costs for college educated workers. The increased cost in non-tradable services (housing) absorbed about half of the increase in the purchasing
power of college educated wages”)

My comment:
(a) The first clause in the abstract explains: “Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers).”
(b) There is no need to read either the WSJ report or the rest of the NBER report.
(c) H1 visa was created by Immigration and Nationality Act (INA), section 101(a)(15)(H), codified as 8 U.S. Code § 1101(a)(15)(H).
www.uscis.gov/iframe/ilink/docVi ... 0-29/0-0-0-101.html

INA itself was enacted in 1965, but revised through Immigration Reform & Control Act of 1986. Prior to that, there was no H1 (of course something by another name existed).
(d) The research subject is “H1B visa program * * * over the 1990-2010 period.” at page 24.
(e) The authors conclude H1-B visa holders creates jobs, in their own words at page 25: “These results indicate that growth in STEM workers spurred technological growth by increasing productivity, especially that of college educated workers. They also experienced increasing housing rents, which eroded part of their wage gain.”
(f) In my view, they (authors) may get mixed up in cause and effect. There is an alternate explanation for the observation (which the authors did not explore, much less exclude), even if the authors’ conclusion is counterintuitive but true. The alternative: a boom town tends to hire more workers, domestic and foreign. See A rising tide lifts all boats
en.wikipedia.org/wiki/A_rising_tide_lifts_all_boats
(section 1 Origins)