America’s Loss is the World’s Gain: America’s New Immigrant Entrepreneurs, Part IV

From the introduction:

Immigrants have historically provided one of America’s greatest competitive advantages. They have come to the United States largely to work and have played a major role in the country’s recent growth. Between 1990 and 2007, the proportion of immigrants in the U.S. labor force increased from 9.3 percent to 15.7 percent. Approximately 45 percent of the growth of the workforce over this period consisted of immigrants. Moreover, a large and growing proportion of immigrants come with high levels of education and skill. They have contributed disproportionately in the most dynamic part of the U.S. economy—the high-tech sector. Immigrants have co-founded firms such as Google, Intel, eBay, and Yahoo. And immigrant inventors contributed to more than a quarter of U.S. global patent applications.

Since even before the 2008 financial and economic crisis, some observers have noted that a substantial number of highly skilled immigrants have started returning to their home countries, including persons from low-income countries like India and China who have historically tended to stay permanently in the United States. These returnees contributed to the tech boom in those countries and arguably spurred the growth of outsourcing of back-office processes as well as of research and development.

Who are these returnees? What motivated their decision to leave the United States? How have they fared since returning? This paper attempts to answer these questions through a survey of 1,203 Indian and Chinese immigrants who had worked or received their education in the United States and returned to their home country. In the absence of a census of all returnees, we could not conduct a random sample of the full population of persons who had been in the U.S. and returned. Instead, we drew our sample from persons on the LinkedIn website who were currently working for Indian and Chinese companies and had U.S. academic degrees or greater than one year of U.S. work experience. The survey was conducted over a period of six months in 2008. LinkedIn is an online network of more than 30 million experienced professionals and managers around the world and provides a valuable source of information on these types of workers. The survey obtained a 90 percent response rate. Though our findings may not generalize to all highly educated returnees, they are representative of the young professionals profiled on the site and potentially of similar persons more broadly.

This paper is the fourth in a series of studies examining the contribution and effect of skilled immigrants to the technology sector. Our previous research showed that immigrants were CEOs or lead technologists in one of every four tech and engineering companies started in the United States from 1995 to 2005 and in 52 percent of Silicon Valley startups. These immigrant-founded companies employed 450,000 workers and generated $52 billion in revenue in 2006. The founders tended to be highly educated in science-, technology-, mathematics-, and engineering- (STEM) related disciplines, with 75 percent holding a masters or PhD (Wadhwa, Rissing, Saxenian, et al., 2007). Using the World Intellectual Property Organization’s patent database, we found that the contribution of foreign nationals residing in the U.S. to global patents had increased more than threefold over an eight-year period (Wadhwa, Rissing, Chopra, at al., 2007).

The motivation for the current study is twofold.

First, our earlier work estimated that there were more than a million temporary workers and students in the skilled-worker immigration categories waiting for a yearly allocation of 120,000 permanent-resident visas. We speculated that these workers might get frustrated at the wait and return to their home countries, producing a flow of immigrant talent from the U.S. to other countries.

Second, we knew and read about immigrants returning to their home countries and wanted to assess the extent to which the anecdotal evidence was supported by survey data. Given the meltdown of Wall Street and the onslaught of a major recession in the United States, this study provides a baseline for assessing changes in the characteristics and reasons for immigrants returning home post the worsened state of the U.S. economy.

We find that, though restrictive immigration policies caused some returnees to depart the United States, the most significant factors in the decision to return home were career opportunities, family ties, and quality of life.