Study Breaks New Ground On The Benefits Of Immigration To Innovation
A new study reveals immigrants boost U.S. innovation and economic growth, particularly by settling in urban innovation hubs. This research refutes arguments by figures like Stephen Miller, who advocate for reduced immigration. Examining 1880-1920, the study found immigrant inflows led to an 8.2% higher GDP per capita by 1940, demonstrating their crucial role. Immigrants contribute through increased workforce size, skilled labor and spatial concentration in innovative areas. Modern data show immigrants founded or cofounded 59% of U.S. billion-dollar companies, with a high concentration in Silicon Valley. Historically, restrictive policies like the 1924 Immigration Act harmed the economy and innovation, a lesson reinforced by immigrants' scientific achievements and Nobel Prize contributions.
A recent study breaks new ground on the benefits of immigration for innovation by focusing on where immigrants choose to live and work. The research is relevant to Silicon Valley and other innovation hubs and refutes White House Deputy Chief of Staff Stephen Miller’s argument that reducing immigration will improve America’s economy.
The study finds that restrictions imposed in the 1920s, which Miller has praised as a model for the present day, harmed innovation and reduced the economic well-being of Americans. The research is the latest in a series of findings that contradict the Trump administration’s rationale for restricting employment-based immigration, curtailing the entry of international students, eliminating non-white refugee admissions and engaging in mass deportation.
A new study finds that immigrants benefit the U.S. economy, growth and innovation. First, “the size of the local workforce increases the return to innovation so that immigrant inflows induce innovation by native (U.S.-born) skilled workers,” according to a study published by the National Bureau of Economic Research authored by Costas Arkolakis (Yale), Sun Kyoung Lee (Univ. of Michigan) and Michael Peters (Yale). Second, “the skill composition of the local population determines the local innovation rate: an inflow of skilled immigrants thus contributes to the creation of ideas.” Third, “spatial differences in the quality of the local knowledge pool imply that the productivity of innovators differs across labor markets. Immigrants’ bias to move to innovative urban centers thus has a direct effect on innovative activity.”
The economists examined the years from 1880 to 1920 and found that immigrants contribute to U.S. productivity, including by choosing to live where their skills complement American workers. Many immigrants during that period settled “in the urban innovation hubs of New York, Chicago and Philadelphia, where most innovative activity took place.”
“We find that the inflow of immigrants during the Age of Mass Migration played an important role in U.S. innovation and growth: without the inflow of international migrants between 1880 and 1920, aggregate GDP (Gross Domestic Product) per capita would have been 8.2% lower by 1940,” according to Arkolakis, Lee and Peters.
The study’s finding that where immigrants choose to live helps spur growth and innovation is supported by recent National Foundation for American Policy research determining 59% of U.S. billion-dollar companies had an immigrant founder or cofounder. “A total of 244 of the 455 (54%) unicorn companies with an immigrant founder or cofounder are headquartered in the San Francisco Bay Area, which includes Silicon Valley and the surrounding San Francisco area,” concluded the NFAP study (I authored the research). “Overall, 350 of the 775 (45%) unicorns (as of April 2026) are headquartered in the Bay Area. In sum, 70% of the Bay Area’s unicorn companies have an immigrant founder.”
“Clusters of people with specific skills really matter for innovation,” said labor economist Mark Regets, an NFAP senior fellow, in an interview. “This is a reason why high-skilled immigration really matters, because you need to allow people to move to clusters, and it is massively in the U.S. interest for it to happen on American soil.” New York has 82 immigrant-founded unicorn companies, followed by 30 for Boston, Cambridge and the surrounding area, Chicago has 11, Bellevue, Washington has six and Los Angeles has five (more if one counts nearby cities).
The 1924 Immigration Act reduced the flow of immigrants to the United States by approximately 90% and blocked Jews, Eastern Europeans and Asians, which harmed America economically by reducing labor force growth, the country’s available human capital and its innovative capacity. However, Stephen Miller, the architect of the Trump administration’s immigration policy, has praised the 1920s national origins legislation. “During the middle of the 20th century—when the U.S. achieved unquestioned global scientific dominance—there was net zero migration,” Miller wrote (on May 31, 2025) on X.com.
Analysts point out that Miller’s statement overlooks the significant scientific achievements produced by immigrants in the post-war period. Between 1945 and 1974, 16 of the 30 U.S. winners of the Nobel Prize in physics were immigrants, according to NFAP. During those same years, 15 of the 36 U.S. Nobel Prizes in medicine were awarded to immigrants. Albert Sabin, an immigrant from Poland, and Jonas Salk, the son of an immigrant, developed the vaccines that ended polio as a threat to Americans. Immigrants were also crucial to developing the atomic bomb.
“Immigrants have been awarded 40% of the Nobel Prizes won by Americans in chemistry, medicine and physics since 2000,” according to an analysis by the National Foundation for American Policy.
Miller’s belief that reducing immigration helps innovation is not supported by economists. According to research by New York University economists Petra Moser and Shmuel San, the restrictive immigration quotas of the 1920s significantly reduced invention in the United States, including by American-born scientists. “After the quotas, U.S. scientists produced 68% fewer additional patents in the pre-quota fields of ESE-born [Eastern and Southern European immigrant] scientists compared with the pre-quota fields of other U.S. scientists,” write Moser and San.
Economic growth relies on labor force growth and productivity growth, and immigrants are essential to both, particularly given the aging U.S. workforce and the key role they play in boosting productivity.
“The Trump administration’s policies on illegal and legal immigration would reduce the projected number of workers in the United States by 6.8 million by 2028 and by 15.7 million by 2035 and lower the annual rate of economic growth by almost one-third, harming U.S. living standards,” according to an NFAP analysis.
Research finds keeping out immigrants also makes individual immigrants less productive. A 2021 economic study found immigrants to the United States are “up to six times more productive than migrants to other countries” and those who stayed at home and did not immigrate. The U.S. university system, business climate, rule of law and other factors allow people like Gleb Yushin, a cofounder of Sila Technologies who came from Russia as an international student, to achieve their potential in America.
Immigrants are responsible for 36% of aggregate innovation in America, over half of which is due to making their U.S.-born collaborators more innovative, according to a model developed by economists Shai Bernstein (Harvard), Rebecca Diamond (Harvard), Abhisit Jiranaphawiboon (Stanford), Timothy McQuade (UC-Berkeley) and Beatriz Pousada (Stanford). “Immigrants represent 16% of inventors, but authored 23% of patents. Immigrant inventors contribute to knowledge diffusion across borders. Using variation from premature inventor deaths, we find immigrant inventors create stronger innovation productivity spillovers on their collaborators, as compared to U.S.-born inventors.”
Immigration remains a means of making the U.S. economy and American workers more productive, thereby fostering innovation and economic growth. Arkolakis, Lee and Peters conclude, “Immigrants’ innate innovative skills and their bias to arrive in and move to urban locations are quantitatively important determinants of the productivity gains from migration.”