Immigration Boosts Local Innovation and Wages, Study Finds
Feb 27th 2026
A new American Economic Review paper uses a county-level identification strategy to show that immigration raises local innovation and wages over five years, with a structural model suggesting about a 5 percent boost since 1965.
- The authors isolate exogenous immigration shocks by interacting quasi-random county ancestry composition with contemporaneous migrant inflows.
- Immigration produces a positive causal effect on local innovation and wages at a five-year horizon.
- Short-run wage declines from higher labor supply are dominated by longer-run gains from increased innovation.
- A structural endogenous growth and migration model estimates that immigration since 1965 may have raised innovation and wages by about 5 percent.
- The paper is published in the American Economic Review (2026) and includes a replication package and supplemental appendix.