Monash University Faridul Islam Morgan State University Chau Nguyen

The paper examines the effects of skilled immigration on wages that can be credited to the immigrants’ contribution to innovation. Using both individual and state level datasets from United States, we find a significant and positive effect of immigration on wages that is attributable to skilled immigrants’ contribution to innovation. Our results confirm the previous findings that immigrants contribute substantially to the host economy’s innovation, which is a major driver of technological progress and productivity growth. When we augment the analysis to immigration-innovation-wages nexus, the results suggest that as the share of skilled immigrants in a particular skill group increases, the wages of both natives and immigrants in that group get a positive boost. We also find evidence in favor of a positive spillover effect of skilled immigrants on a state’s wage level of all workers, including those who do not directly contribute to innovation