American Economic Review Vol. 116 No. 3 2026

Immigration, Innovation, and Growth

Stephen Terry¹; Thomas Chaney²; Konrad Burchardi³; Lisa Tarquinio⁴; Tarek A. Hassan⁵

¹ University of Michigan and NBER (email: ) · ² University of Southern California, Sciences Po, and CEPR (email: ) · ³ Institute for International Economic Studie (email: ) · ⁴ University of Western Ontario (email: ) · ⁵ Boston University, NBER, and CEPR (email: )

Abstract

We propose a novel identification strategy to isolate exogenous immigration shocks across US counties, by interacting quasi-random variations in the composition of ancestry across counties with the contemporaneous inflow of migrants from different countries. We show a positive causal impact of immigration on local innovation and wages at the five-year horizon. The positive dynamic impact of immigration on innovation and wages dominates the short-run negative impact of increased labor supply. A structural estimation of a model of endogenous growth and migrations suggests the increased immigration to the United States since 1965 may have increased innovation and wages by 5 percent.

DOI

10.1257/aer.20211601

Volume

116

Issue

3

Pages

828-861

Language

en

Sources

openalex crossref

Cite

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