Skilled migration and innovation in European industries

Abstract

This paper studies the effects of skilled migration on innovation -proxied by patent citations- in European industries between 1994 and 2005, using the French and the UK Labour Force Surveys and the German Microcensus. Highly-educated migrants have a positive effect on innovation, but the effect differs across industries. It is stronger in industries with low levels of overeducation, high levels of FDIs and openness to trade and, finally, in industries with higher ethnic diversity. The aggregate effect of the skilled immigrant is about one third the one of the skilled natives. We tackle the endogeneity of migrants with a set of external and internal instruments.