The Gift of Global Talent
How Migration Shapes Business, Economy & Society
William R. Kerr


Contents and Abstracts
Introduction: Why Global Talent Matters to You
chapter abstract

Talent is the world's most precious resource, is movable, and is shaped by the environment that surrounds it. America benefits greatly from the immigration of talented people compared with other countries, and talent clusters like Silicon Valley receive particularly large inflows. This introduction outlines the structure of the book, and it presents the growing disconnect between the economic benefits that skilled immigration brings and the increasing hostility in advanced economies toward talent flows. America, and arguably the world, will suffer if the country does not reform its immigration policy and change the anti-immigrant tone of its political rhetoric.

1 Talent on the Move
chapter abstract

While talent is a spectrum, ranging in this book from Nobel Prize winners to college graduates, there are several important commonalities in how talent moves globally: (1) exceptionally talented people migrate around the world at significantly higher frequencies than the general population; (2) a select number of countries, especially America, receive most of these talent flows; (3) these inflows are materially important for America's workforce and accomplishments; (4) growth in global talent inflows is closely timed with stronger participation of skilled natives, too; and (5) much of the recent growth in migrating talent is from China and India. Many countries are competing for this global talent, especially given America's imbalances, and talented people move around the world for reasons ranging from higher wages to fleeing humanitarian crises.

2 The Economics of Talent Clusters
chapter abstract

Some professionals, like actors and bankers, gravitate toward talent clusters, while other skilled professionals do not. Likewise, some skilled occupations concentrate in a small number of world-famous centers while others spread out. Two conditions must be met so that wages do not fall with a huge concentration of skilled people in the same sector: (1) the created product must have national or international reach in terms of its sales, and (2) the productivity of talent workers must be enhanced by proximity and access to other talent. The resulting talent clusters can create ecosystems, cultures, and industrial structures that support the specialized work, especially in innovative sectors, which in turn draws in more like-minded talent. The largest brakes for the growing talent cluster are usually escalating rents and prices. Although talent clusters are powerful magnets and are sticky, they are also inherently free to move about in space.

3 Innovation in the United States
chapter abstract

The American tech sector is the most important destination for global talent flows. Migrants make up around 25 percent of America's innovative workforce in science, technology, engineering, and mathematics (STEM) fields. They are responsible for similarly large shares of U.S. patenting and entrepreneurship, having grown substantially over the past forty years. Global talent primarily has an impact on American innovation, not by quality differences to the average native working in the field, but through the enormous quantity of STEM talent that inflow provides. Global talent has altered the geography of U.S. innovation, as skilled migrants disproportionately favor some cities because of precedents set by past immigration waves and business factors. In particular, Chinese and Indian innovation in Silicon Valley has become an exceptionally large share of U.S. patenting. Per the economics of talent clusters, massive STEM immigration has not substantially altered the local wages paid to native-born STEM workers.

4 Points Versus Firms
chapter abstract

Countries differ substantially in their immigrant admissions and selection methods. While America focuses to a large degree on family-based immigration, its channel for higher-skilled immigration (the H-1B program) establishes the firm as central gatekeeper for talent flows. Compared with a points-based approach, the firm-sponsored system ensures employment of the migrant but also creates tensions: tied employment relationships for workers, volatile occupation demands over short horizons, and unintended uses of visas (e.g., H-1B visa use for outsourcing). Some American firms use skilled migrants to enable growth, but others seek to minimize costs. Older tech workers are particularly vulnerable to displacement by younger immigrants. Native workers are increasingly moving into fields complementary to immigrant talent. The H-1B system is important for understanding why the U.S. tech sector has been such a focal point of global talent flows.

5 The Education Pathway
chapter abstract

Many firms recruit global talent directly from U.S. schools, which are the target of many parents and students globally. This makes colleges and universities the second gatekeeper of talent through their influence on student populations. Foreign enrollments have been substantial among graduate students over several decades and are now surging for undergraduates. These students have powerful impacts on American schools, as they help alleviate budget squeezes and bolster high-profile research. Many faculty members are also immigrants, and academia shows some evidence of native displacement. The current immigration structure for skilled workers can be visualized as several pipes linked together, starting with the widest pipe for university admissions, and then progressively narrower pipes until reaching the final stage of permanent residency. This leads to a shortfall of work visas for graduating foreign students, with many workarounds like the Optional Practical Training program seeking to bridge the gap.

6 Talent Clusters to Rule Them All
chapter abstract

Global talent is crucial in driving forward the "knowledge economy" that has given birth to breakthroughs like artificial intelligence and the internet of things. Firms are increasingly moving toward talent clusters to understand the frontier ideas emerging in their sectors, access the global talent needed to refine and apply these ideas, and facilitate strong information flow throughout their organizations. As Moore's law continues to push computing power, this imperative becomes acute for firms. High-profile start-up companies occupy a few special talent clusters and challenge incumbent ways of doing things. Many large companies are also accessing talent clusters through the relocation of corporate headquarters and the creation of research and development outposts. There are many gains from the centralization of talent and corporate resources, such as partnerships and strong diversity, but also potential costs, ranging from collusion to corporate layoffs in remote facilities.

7 The New HR Challenge
chapter abstract

Companies in advanced economies are increasingly pulled abroad to countries with young and educated populations. Many U.S. multinationals have the majority of their employees outside of America and require leaders to have global careers. There are several strategies for cross-border expansions that utilize global talent, and cross-border teams are becoming quite frequent for innovative work and the launch of new R&D operations. HR leaders must juggle diverse employment practices across countries while preserving critical aspects of their firms' work culture. Firms are also increasingly tapping into talent pools beyond their employees, as virtual connections allow them to reach outsiders who have the best skills or ideas. This is especially important in innovation, where access to the best ideas matters most. Companies are also using digital labor to complement their internal workforces for many tasks.

8 Global Diffusion Remade
chapter abstract

Global talent flows are not a zero-sum game, as placing talent where it is most productive provides global benefits. Talent-sending countries can suffer brain drain through lower job creation, reduced tax revenues, and so on, but brain gain can occur when a diaspora provides a talent-sending country with special access to frontier technologies and aids diffusion, such as the ethnic networks between Silicon Valley and Asian clusters. Entrepreneurs increasingly take home the best ideas from frontier countries, and others study hard to go abroad but never leave. Through these operations, global talent serves to simultaneously heighten the value of frontier talent clusters but also diffuse its benefits. Talent-sending countries need to engage their diaspora, and larger countries like China and India can especially benefit from the economic incentives to create business connections, which does not occur for many smaller and remote nations.

9 Revenge of the Nerds
chapter abstract

In advanced economies, the gains from global talent are not equally shared, and the expanding economic and social gaps are leading to distrust and resentment. Global talent flows are not directly connected to some of the major causes of inequality like automation or Chinese imports, but they are a catalyst for outsourcing and offshoring, which stokes fears among Americans. Business culture also focuses more on performance versus paternalistic ties to workers, and superstar firms are today achieving enormous size but employing few workers. These additional forces also closely tie into global talent, which benefits from them. Geographically, the economic benefits that accrue from increasing global talent flows are not spread evenly across America but are concentrated in the talent clusters. These challenges, coupled with the social isolation of coastal elites, produced substantial political backlash in the 2016 elections in America and the United Kingdom.

Conclusions: Fragile U.S. Leadership
chapter abstract

America's leading position in attracting global talent is a result of early wise choices, an openness to new people, and sheer luck. As the race for talent intensifies, America will cede some of its position to emerging countries due to their economic development and strong capabilities. America can remain the leader, or it can head toward a steep decline, depending on whether it can restore the trust that global migrants place in it. Legal reforms include changes to the H-1B visa system to improve visa allocation, the design of better and more balanced immigration pathways, and the collection and distribution of information about the use of skilled visas. There are calls to the tech industry to share the gains from global talent more broadly with the rest of society. Whatever choices are made in this realm, it is crucial for America to safeguard its most important resource.