NCPA - National Center for Policy Analysis

The Human Capital Imperative: Bringing More Minds to America

February 8, 2012

There is no doubt that immigration is often a contentious and polarizing political issue.  However, in the important national dialogue over the issue, it is crucial to parse high-skilled immigration from low-skilled immigration.  This first group must be recognized as a crucial tool for long-term economic growth, spurring entrepreneurship and innovation by augmenting our national stock of human capital, says Nick Schulz, editor-in-chief of and the DeWitt Wallace Fellow at the American Enterprise Institute.

  • According to recent estimates, the stock of human capital in the United States tops $750 trillion.
  • This figure dwarfs an estimate by JP Morgan that physical and financial capital in this country total only $70 trillion.
  • While the United States has an enormous concentration of human capital with a highly educated, highly productive workforce, it must be recognized that there remain many individuals around the world that could add to it.

High-skilled immigrants are, as a population, vessels of human capital.  They are highly productive with great ambition and willing to accept risk, thereby contributing to their entrepreneurial disposition.  These characteristics manifest themselves in their high propensity for starting new businesses, obtaining patents, and breaking barriers in the global marketplace.

  • Robert Fairlie of the University of California at Santa Cruz noted in research published in 2008 that immigrants are 30 percent more likely to start a business than those who are native-born.
  • According to Pia Orrenius of the Federal Reserve Bank of Dallas, immigrants accounted for well over 50 percent of the growth in employment in STEM-related fields between 2003 and 2008.
  • Skilled immigrants are awarded patents at high rates, and the presence of skilled immigrants bolsters the rate at which native-born Americans patent as well.

Additionally, immigrants are in an excellent position to offer comprehensive understanding of foreign markets to American firms.  They strengthen business networking and encourage trade with their home country. They also attract foreign capital by boosting the global competitiveness of American firms.

In a global economy that offers opportunities around the world, immigrants have many choices about where to settle.  Therefore, lawmakers should ease the legal immigration process, granting more visas and removing bureaucratic barriers.

Source: Nick Schulz, "The Human Capital Imperative: Bringing More Minds to America," American Enterprise Institute, January 31, 2012.

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