The Gift of Global Talent

How Migration Shapes Business, Economy & Society

William R. Kerr

• Verlag: Stanford Business Books
• Jahr: 2018
• ISBN:
  9781503607361
• Auflage: 1
• Thema: Economics
• Thema: Labour Economics

The global race for talent is on, with countries and businesses competing for the best and brightest. Talented individuals migrate much more frequently than the general population, and the United States has received exceptional inflows of human capital. This foreign talent has transformed U.S. science and engineering, reshaped the economy, and influenced society at large. But America is bogged down in thorny debates on immigration policy, and the world around the United States is rapidly catching up, especially China and India. The future is quite uncertain, and the global talent puzzle deserves close examination.

To do this, William R. Kerr uniquely combines insights and lessons from business practice, government policy, and individual decision making. Examining popular ideas that have taken hold and synthesizing rigorous research across fields such as entrepreneurship and innovation, regional advantage, and economic policy, Kerr gives voice to data and ideas that should drive the next wave of policy and business practice.

The Gift of Global Talent deftly transports readers from joyous celebrations at the Nobel Prize ceremony to angry airport protests against the Trump administration's travel ban. It explores why talented migration drives the knowledge economy, describes how universities and firms govern skilled admissions, explains the controversies of the H-1B visa used by firms like Google and Apple, and discusses the economic inequalities and superstar firms that global talent flows produce. The United States has been the steward of a global gift, and this book explains the huge leadership decision it now faces and how it can become even more competitive for attracting tomorrow's talent.

Please visit www.hbs.edu/managing-the-future-of-work/research/Pages/default.aspx to learn more about the book.

Part 1

THE ROOTS OF GLOBAL TALENT FLOWS

Chapter 1

TALENT ON THE MOVE

IT IS DECEMBER 10, 2016, and the darkness of the long Swedish winter pervades. A light snow falls, and yet Stockholm is alive and buzzing. Over the previous days, the exceptional scientists and researchers chosen to receive the 2016 Nobel Prizes delivered thoughtful lectures, and many dignitaries from around the world arrived for the grand awards ceremony. Tonight, King Carl XVI Gustaf of Sweden awards the Nobel Medal, the Nobel Diploma, and a nice-sized check to recipients. Following tradition, President Juan Manuel Santos of Colombia will receive the Nobel Peace Prize in a separate ceremony in Norway.

The glitz and glamour of the Nobel Prize rivals that of the Oscar. The dress for the prize ceremony is precise and inspiring: “Gentlemen are required to wear white tie and tails, while ladies should be dressed in an evening gown. This is the perfect time to dress up and look like royalty!”¹ Officials rehearse the pronunciation of names many times to avoid a blunder when delivering the award. The Nobel organization also prepares a detailed dossier with the accomplishments of the recipients and their personal backgrounds, avoiding the awkward small talk of “So, tell me, what do you do?”

The dossier makes an interesting distinction: it lists both the places of birth of recipients and where they currently work. Many of these locations are very different. Seven of the eleven prizes were awarded to people working in the U.S., with the other four awards going to Colombia, France, Japan, and the Netherlands. However, only one awardee, musician Bob Dylan, was born in the United States. Six of the eleven prizes went to global migrants working outside of their countries of origin, all of whom were working in America.

Does it always look like this at the Nobel Prize ceremony? Well, the migration aspect is quite common, and the U.S. is often the new home, as well. In 2015, for example, five of the nine awardees were living outside of their country of birth. In 2013, four of the nine U.S.-based recipients were immigrants.

The migration of very talented people to America shows up in many places. Immigrant actors and performers include Justin Bieber (Canada), Bruce Willis (Germany), Rihanna (Barbados), and Natalie Portman (Israel). Professional sports boast many immigrants, with every National Basketball Association team having an immigrant in recent seasons. Prominent business executives and entrepreneurs include Google’s Sergey Brin (Russia), Pepsi’s Indra Nooyi (India), and News Corporation’s Rupert Murdoch (Australia). Even politics is covered, with Henry Kissinger (Germany) and Madeleine Albright (Czech Republic) becoming U.S. secretaries of state—the very face of America beyond the president. The Terminator and Governator, Arnold Schwarzenegger (Austria), could fit into several talent bins at once.

Our opening chapters paint a broad portrait of talent flows around the world, preparing us for in-depth business and policy discussions. The global migration of superstars turns out to look a lot like that of college graduates, and both groups differ in important ways from the migration of lower-skilled workers. This first chapter equips us with this background, but to move on we must first discuss what we mean by “talent.”

Defining Talent

In a famous 1964 Supreme Court case regarding pornography, Jacobellis v. Ohio, Justice Potter Stewart concurred with the court’s decision that the Constitution protected all obscenity except “hardcore pornography.” Stewart then wrote: “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But, I know it when I see it.”² The “But, I know it when I see it” standard has since been used in everything from tacit business decisions to descriptions of love at weddings.

“Talent” is similarly easy to recognize but hard to define. It is easy to agree that Nobel Prize winners display great talent, but our focus is on a broad set of people outside of this extreme. Education is a good yardstick, as it is roughly comparable across countries and often used to screen immigrants. Yet Bob Dylan dropped out of college. The same is true for tech pioneers like Steve Jobs, Bill Gates, and Mark Zuckerberg, and for twenty-one members of the 2017 U.S. Congress.³ Education credentials are thus helpful, but not perfect, either.

It would also be quite useful to separate innate talent from education, but these two factors become hopelessly intertwined. A promising Indian student may gain a scholarship to MIT, with that education then leading to a great job at Microsoft. But her equally promising friend may attend one of the famed Indian Institutes of Technology, later to be recruited by Microsoft after graduation. Parsing education from talent in these settings is not feasible; Microsoft likely valued both. We will instead find it more productive to consider the different pathways that talent take to reach their new home.

In the end, we use shorthand descriptions like “talent” and “skilled.” This is admittedly imprecise, and yet this vagueness can be helpful when formal definitions are limiting or lead to premature conclusions. Talent is a spectrum, not a binary trait, and we want to describe as much of the terrain as possible. To get started, we will offer three complementary approaches to measuring talent. By triangulating common patterns across multiple sources, we overcome their individual shortcomings and build a rigorous foundation for the observations that follow. Moreover, the differences are fascinating to explore.

Data Sources on Global Talent Flows

Our first approach to measuring talent continues with Nobel Prize winners. This approach employs individual-level data for the Nobel Prizes in Chemistry, Medicine, and Physics, which have been awarded since 1901, and for the Nobel Prize in Economic Sciences, which has been awarded since 1969.⁴ Nobel Prizes in these four fields are particularly useful for studying global talent flows, as their historical records identify countries of origin and places of work.

Second, we consider inventors. The World Intellectual Property Organization (WIPO) compiles data on patents and inventors, including inventor nationalities, from intellectual property offices around the world. This global database allows apples-to-apples comparison of immigrant invention across countries.⁵ We also undertake a detailed analysis of patents granted by the U.S. Patent and Trademark Office (USPTO), which offers comparable data over a longer time span for America. This second approach provides a wider portrait of innovative activity than the extremes of the Nobel Prize.

Finally, the broadest metric of talent that we employ is possession of a college degree. A massive data project led by the Organisation for Economic Co-operation and Development (OECD), the World Bank, and the International Migration Institute at Oxford University has recently combined and harmonized immigration records and censuses from many countries to build a systematic database on global education levels.⁶ We have historically known far more about the traded physical products being shipped in cargo boats than about the people migrating in jet airplanes, which is crazy for today’s knowledge economy. These Herculean data efforts are substantially closing the gap.

The most reliable data focus on immigration to twenty-nine OECD member states (we refer to this simply as “the OECD data” for this chapter).⁷ These countries include most of the economically advanced nations in Europe, North America, and Asia. Inflows come from around the world and afford education-based metrics of global talent flows. To provide a sense of these data, there were about twenty-eight million college-educated immigrants residing within the OECD member states in 2010. About one-third of these immigrants were born in one OECD country and then moved to another, but the majority came from non-OECD nations. China, India, and the Philippines alone accounted for five million of these immigrants. Talent flows from non-OECD countries increased by 185 percent from 1990 to 2010, making them the largest contributor to expanding talent bases in many countries.

These three measures—Nobel Prize winners, inventors, and college graduates—provide different views of the movement of global talent, but also show some remarkable similarities. What features do they hold in common?

Patterns of Global Talent Flows

Collectively, our data sets trace out five important patterns regarding the mobility of talent. These features are quite consistent, differing only in the strength of the effects.

1. Exceptionally talented people migrate around the world much more frequently than the general population does.

Approximately 3 percent of the world’s population lives outside of its country of birth, a share that has been fairly constant since the 1960s. As the world’s population has increased from three billion people in 1960 to more than seven billion today, the absolute count of migrants has more than doubled. The United Nations places the world migrant count at 244 million for 2015.⁸ To put this number in perspective, the global refugee count stands at twenty million. And yet, relative to other forms of international engagement, people flows are rather low. Physical goods, for example, move across borders at a relative rate that is ten times greater than that of people.⁹

Against this general backdrop of migration, talented individuals move more frequently. College-degree holders are estimated to migrate globally at three times the rate of those with secondary educations. The precise numbers here are hard to nail down, but one set of estimates suggests that 5.4 percent of college-educated workers migrate, compared with 1.8 percent of those with high school diplomas and 1.1 percent of those with lower education levels.¹⁰

Mobility increases with higher levels of talent. Since 1901, 31 percent of Nobel Prizes in chemistry, medicine, physics, and economic sciences have been awarded to scientists working outside of their countries of birth (203 of 661 individuals). This is about seventeen times higher than the migration rate of high school graduates.

Moving down a notch on the talent spectrum, the WIPO data estimate a 10 percent worldwide migration rate among inventors for 2000–2010.¹¹ More precisely, one in ten inventors active during the 2000s was a citizen of a country different from the one in which he or she was working. Since some immigrants become naturalized citizens of their new home, this measure undercounts the total global talent flow, but it is close enough. The 10 percent inventor migration rate sits between the college-educated rate of 5 percent and the 31 percent rate for Nobel laureates, indicating a continuum across talent levels as shown in Figure 1.1. This is also true among inventors themselves. The top 5 percent of inventors, as measured by the impact of their work, are five times more likely to be migrants than other inventors.¹²

FIGURE 1.1 Global movement of talent by skill level.

Sources: Data from Nobel Prize records, Miguelez and Fink (2013), Kerr et al. (2016), and Hanson and Liu (2017).

2. A few advanced economies, especially America, receive most of these talented migrants.

Let’s begin again with the broadest measure of talent: Although OECD countries contain less than 20 percent of the world’s population, these advanced economies host two-thirds of the world’s college-educated migrants. America has historically grabbed more than half of these skilled immigrants who come to OECD countries, although that share declined to 41 percent by 2010. Australia, Canada, and the United Kingdom are the next-most-common destinations, combining to garner about 25 percent of talent flows.¹³ By comparison, lower-skilled migration is more diffuse and flows toward a broader set of countries.

As one proceeds up the talent hierarchy, the tilt in America’s favor becomes pronounced. Within the WIPO data, displayed in Figure 1.2, the four most prominent destinations for inventors are the U.S., Germany, Switzerland, and the U.K. These four nations collect 65 percent of immigrant inventors, and America accounts for 57 percent by itself! The U.S. pulls from everywhere. The draw is so extreme that, even though Germany and the U.K. rank among the four largest destinations for inventors, their outflows to America are even larger than their inflows and consequently they end up as net sending countries.

FIGURE 1.2 Global migration of inventors during 2000–2010.

Sources: Data from World Intellectual Property Organization and Miguelez and Fink (2013).

The Nobel Prize data are also unambiguous: America received 53 percent of all global migrants who won the Nobel Prize in the four fields of chemistry, medicine, physics, and economic sciences (107 of 203 individuals). While four American citizens were affiliated with a foreign institution when they received the award, 107 immigrants had come to a U.S. institution. Talk about a “trade imbalance.” When a leading French economist lamented to me the flow of his nation’s academic talent to America, he said did not know the exact share, but he was pretty sure it included “almost everyone wh...