Can skilled immigration raise innovation? Evidence from Canadian Cities

We examine the effect of changes in skilled-immigrant population shares in 98 Canadian cities on per capita patents. The Canadian case is of interest because its 'points system' is viewed as a model of skilled immigration policy. Our estimates suggest that the impact of increasing the university-educated immigrant share on patenting rates is modest at best and unambiguously smaller than the impact of skilled immigrants in the USA. We find larger effects of Canadian science, engineering, technology or mathematics (STEM)-educated immigrants employed in STEM jobs, but this impact is limited because only one-third of Canadian STEM-educated immigrants are employed in STEM jobs, compared with two-fifths of native-born Canadians and one-half of US immigrants. Our findings suggest that for most countries, skilled immigration is unlikely to be a panacea for sluggish innovation and that the US experience may be exceptional.