Immigration and Invention: Evidence from the Quota Acts

Abstract

Inventions often economize on labor, so economists have long posited that scarce labor should encourage invention (Hicks, 1932). But the production of new inventions can require a division of labor and economies of scale that require plentiful labor instead. We provide the first causal evidence of mass immigration’s effect on invention, using variation induced by 1920s quotas, which ended history’s largest international migration. Inventors in cities and industries exposed to fewer low-skilled immigrants applied for fewer patents. Industries with small establishment sizes attracted an everincreasing share of invention. Labor scarcity affected both the rate and direction of inventive activity.