administration stepping in on one side of the debate, and for us, i think we're supportive to wait and see how that plays out. >> the next thing i would like to turn to is an issue that came up this week, it has come up before, but it was highlighted this week when the broadcaster put out a statement accusing time warner and some other spectrum holders of squatting on spectrum and not actually using it. i think it gets to this idea of there is at least some debate out there about whether there is a spectrum shortage and how do you know if there is a spectrum shortage because you're not sure who is using their spectrum right now. i wonder if everybody could sort of address that. how do we know there is a spectrum shortage if if we're not still sure who is using their .. question. i think it is inevitable there will be a spectrum shortage at some point if more spectrum isn't brought in on the supply side. whether that's in -- whether it is in six months or three years or five years or seven years

doesn't matter. it means it is a no regret sensible move to start putting spectrum to its best possible use, particularly given most of the areas where there is material spectrum, the lead time is several years to get it done. so i don't really think it matters at all. >> so is the fcc still work on a spectrum inventory or ntia, you were talking about doing that too, right? >> that's right. we are talking about doing that, right? >> that's right. we are working on a spectrum inventory. it's sort of a misnomer, we all know when the spectrum and the inventory is used for. the bills in congress really go to how much of that is really going to be transparent and readily available for the public to see, but we're -- we're above the 500 megahertz effort and the broader effort at the fcc is very much engaged in utilizing the spectrum in the most efficient way, and in order to

do that you obviously have to know what the current uses are. we don't think that there's any question but that there is a need to make more spectrum available for commercial use. we're dealing in an environment which we're not going to change very much from a -- from a regulatory standpoint in that in this world five years is fast, and in order -- and in getting spectrum reallocated and -- and getting spectrum repurposed and moving existing uses out and bringing new uses in, so we don't think there's any question but that we have to be engaged, both us and the fcc now to make more spectrum available? >> could i -- could i use this, again, to talk about secondary markets. it seems to me we were much in favor of the inventory because the way we're going to understand whether there are folks who actually need to use something and whether there's that something to use is to know

whether it's in the market, and this -- this whole argument about whether there's enough or not is a little bit beside the point. the point is on any particular business case there may be a need for spectrum to do x, y or z, and if he with the ability to understand where that spectrum is, right? good perfect information means a perfect market. no information means no market. we need the information out there so that the market can work, and then we will really understand and see, right, where these uses are workable. we then have to get into a flexible use kind of regime, in my view, in order for this to be successful, and then my radical idea from years ago, larry, was i think the federal government ought to be using a market-based way of actually allocating their spectrum in that if we were to get those principles embedded in the federal side as well, that might actually clear up some issues around whether there's a

shortage and how this ought to be used for the highest and best purpose. >> when you talk about making spectrum available, as paul said, it's a question of timing. figure a year for the rule-making, a year for the court appeal, another year for the remand and another year for itu coordination plus another year as a fudge factor because everyone forgets there's an election. go five years into the future and look at what the projections are for how much demand there's going to be. no one doubts that after five years the answer is it's so large that we don't know how many seros are so the question then becomes what if we make a mistake? do we want to make the mistake erring on the side of let's not have enough, and then what happens is we're faced with a scarcity regime and we all know what happened with red lion and acbasher. we don't know that for this new opportunity for -- for economic growth.

we just need to be sure that if we make a mistake we err on the side of abundance. >> i'd just follow up on that by saying the beginning of the dialogue within the broadband plan, we did a bunch of different kind of questions that would help us think about things, and the one question is what is the biggest risk to the broadband ecosystem in the united states in the year 2020? there's lots of different risks, right, a lot that we could not control, but one we could definitely control is if not year 2020 we are at a spectrum disadvantage in terms of the amount in the commercial marketplace relative to our competito competitors, it means that probably on the most important platform for the distribution of all kinds of goods and services, both the quality -- it's like having all of our roads have lots of potholes but also be toll roads. there's an extra cost and a diminution in value that would definitely hurt the economy, so we started looking for mechanisms so that the market itself can adjust, and what i found kind of amusing about the

nab criticism of cable is that it didn't understand what we're talking about is enabling people to respond to the markets. it could well be that there's a technology that makes spectrum worth less. if so, incentive auctions take on a completely different character, you know. on the other hand, somebody invents something we haven't thought of that requires a lot more, so it's really exactly about what folks here have said. it's the timing of the thing and making sure that our economy is not hurt in ways we can't anticipate ten years from now. very quickly, it may be historically the best thing that reid and i got to work on or got to do was to have a date certain. the day we arrived at the fcc in 1993, the end of the digital television transition would have been 2023, and that was a soft deadline. if we had not insisted on a hard deadline, which then got moved back by a couple years, but the point was that's where 4g is going to be for the united

states, but we had no idea that's what it was going to be. just knew there had to be a deadline so my theme of this panel is we need deadlines and we also need markets. >> i was just going to add that other countries around the world are allocating and assigning significant blocks of spectrum. germany, which is the home country for our parent company, last year auctioned off about 350 megahertz of spectrum, and they did a big auction of their digital dividend, their broadcast spectrum, some 3g spectrum that was returned, and their 2.5 spectrum, and then some cats and dogs, but it add up to 350. the u.s. had really just sort of caught up with the rest of the world in about the last year or two in terms of total amount of spectrum allocated for commercial wireless, and now we're, you know, well behind again so we -- i mean, at least that's a sanity test, that it's not some sort of strange thing going on here. the other thing i'll add is that -- i mean, these devices

that people carry around now, are just sucking up bandwidth and from a network management point of view talk to the ceo responsible for network, i mean, it's just really a challenge to keep up with the demand. he tells me that like three years ago when this was the sort of dominant smartphone thing, these things used 20, 30, 40 megabitz a month and now our smartphones, an average on the users, a gigabit a month. that's more than an order of magnitude difference, so you build the networks and get the spectrum and the demand, you know, sort of -- you can call it a virtuous cycle sometimes, when the bandwidth is there they build the devices to use it and the app writers write the great apps that will work on it, but from a network point of view it's a vicious cycle because you can never really, you know, keep ahead of the demand so spectrum is a critical ingredient there. i will add though that our view

on buildout requirements has changed as a result of some people not building out their spectrum as quickly perhaps as we would if it were on the market, so i realize -- in economic theory bill, requirements are not a good thing, but in practice we may support them. >> okay. so let's turn to -- let's turn to incentive auctions then. so if we're to assume that coming actually passes legislation that would allow the fcc to do incentive auctions what, should they look like? how would you actually set them up? if you were in charge of it, and paul, i guess you kind of are, but for everyone else what would you do? and it's open to the entire panel, yes. >> i'm going -- i'm going to listen. i'm tablinging notes. >> blair, would you like to start? >> i want to reiterate paul's point. there's a lot of work that's not apparent to the public about this stuff that's been going on while other parts of the commission we're dealing with,

other issues that will remain nameless. we -- when we started kicking this around, incentive auctions with the bureau back in the ummer um -- the summer of '90, the great auction genius that came up with the multi-round simultaneous blah, blah, blah, i mean, the auctions that we did back for the "a" and "b" block in '95 and '94, the same guys were talking -- had a lot of really great ideas. i don't think the commission has yet gone public with them, and i'm not going to -- i'm not going to wreck that. i will just say that i have a high level of comfort that there are strategies using the most sophisticated nobel prize winning game theories that are nonetheless doable, achievable, i think would be very smart and, you know, depending on the economics will succeed, and if they don't succeed because the current economics mean that the

value of the spectrum is not greater than the value of the ongoing enterprise of the alternative, well that's perfectly fine. i mean, that's the whole point, that it is the market. i mean, kind of -- the situation that we really want to avoid is the situation where somebody owns spectrum where the spectrum itself is worth way more than the value of that enterprise, even to that person, but there's no way to get benefit by giving it back. it's still more valuable to keep it. we don't want that situation in 2020, and that's -- but there are mechanisms to do that. >> david? >> one thing i would add, just to be -- the big focus is on the broadcast spectrum, but i think there should be general authority. as i indicated mss might be the initial application. there's no reason even to limit it to specific bands because there could be opportunities in areas we're not focusing on right now. i -- i was talking with evan corel who is the auction economist expert on auctions at the fcc, and he had an idea

where the people who are offering their licenses sort of participate in a dutch auction where you start, you know, the very high price, sell here, sell here and that generates a supply curve and then the people who want to buy it, you know, bid up and that generates a demand curve and those two cross, voila. it looked great in theory, again. i didn't really internalize it, but ideas like that i think are very fruitful and we'd have to sort of work them through to see if they are doable. it may not be practically doable, but there are a lot of good, you know, smart people looking at that issue right now. >> david. >> we certainly have a lot invested in dtv. we brought the idea of settop vouchers to the commission. they adopted it. it worked, but now a few years later we realize, looking at these things as you have to every new year with a new set of eyes, that that spectrum, for the most part, not entirely, for the most part is going to be more valuable to the public if it's used for wireless.

so the question that broadcast companies have raised is that's great if it's voluntary. it's another opportunity for us to monetize our as set, if we choose to, but how do you make sure that it's always going to be voluntary? the answer to that is you can't and shouldn't. the commission does have the ability to trot out section 304, remember, the rights to the ether, no squatters' rights. if it chooses to. it is a last resort, but the commission should never concede the possibility that should it be necessary to do so, it would -- it does have the ability and could as a last resort use it to get the spectrum repurposed in the national interest. >> kathy, do you have anything? >> i think i'm going to take that up. but i do think we want to -- i think to everyone's point here. if there are indeed mechanisms, smart ideas, i think we do have to start getting them on the table and cannedling them

against actual business realities and figure out a way that buyers and sellers can actually get comfortable with what this might look like, so i'm hoping this is sort of next steps. let's start to real think about the details, and i assume there's more than one model, and i assume that -- that that's worthwhile getting them up on the white board, as i say, and starting to actually take a hard look, so -- >> you will see many more specific ideas coming out about how to exactly run this. it's obviously a very difficult thing to organize. >> very difficult, and i think we all have to start by saying it's not been done before and we have to figure it out. i think we want multiple ideas on the table or at least some discussion about what can be successful. >> that's right. once principle for us, you know, everyone thinks it's not talked about very much and part of the point of incentive auctions is to be able to share the proceeds to people voluntarily contributing spectrum. the other part is there's a

value-add role for the auctioneer in the middle as far as creating contiguous blocks in the broadcast side, contiguous from a frequency perspective and contiguous from a geography perspective and not standing the huge value gap in the uses of the spectrum, there's a huge amount of value that can be add through the mechanism if the mechanism is designed properly to the spectrum that's going in before it's going out and i think part of our core design principle is figuring out how to maximize that. >> then i'm very concerned about the long now, if you will. we were so sure that the broadcasters would have five channels that they were going to build out, hdtv all over the entire universe and that this is what this stuff was going to be used for when we started way back when. well, you know, that's not what the market bears, and now we have to go through this entire wrenching sort of let's reallocate again because the market did something that wasn't anticipated. so as we think about this, i hope we're also thinking about

the next thing and whether, in fact, we can keep the market dineic. >> if we're talking about auctioning off a lot of peck trum and our friends from at&t are also in the room, i also wanted to bring up the idea of spectrum caps. if you're going to auction off all the spectrum in the future, shouldn't you have caps in place to make sure that the verizons and at&ts in the world don't just buy it up so other smaller carriers can't increase their spectrum position? tom, you want to take this one. >> you want to guess what the answer is going to be? >> the spectrum cap order did not say that the commission would be indifferent to aggregation by major players in spectrum auctions or in mergers, and indeed in mergers, what it said was we want to get away from a hard and fast cap and evaluate this on a case-by-case

basis. it does that in a merger. it does order divestitures and not usually too heavy but nonetheless the concept is there, and they have a screen and you go through it, and if you're over the screen you get a close look, and if it looks like it's too much spectrum, they will be order to sell off some of the licenses. it hasn't done that case-by-case approach yet in the auction context, and frankly i think going forward it should, because first of all, some would do so and secondly on a case-by-case basis there may be reasons you want aggregation limits. in the engineer american auction, our parent company was one of the incumbents and the german regulators limited t-mobile germany and vodafone, who are the two largest in terms of the amount of lower band spectrum in their version of 700 megahertz they could get because it didn't want it to buy it all and it left some of it for others, so some things like that are possible. i couldn't address exactly what

they should be, and the rules would have to be adopted before the auction. in theory part of that sort of suggested, well, we could look at who wins it and then decide but trying to undo an auction after it's over would just be a terrible mess. so i think that has to be on the table, but, again, i don't know that it would support a version of the spectrum cap which said this number and no more, you know, a priory. >> kathy, i assume you're not going to want that on the table. >> one, i learned my spectrum theory from blair and reed and the whole idea was that you create a market so that there are players that can make the best and heist use and actually build stuff and have the ability to do that are the ones that win these things and have been very successful theory. two, i think it was tom and i who worked on taking the spectrum caps off with just the theory that tom laid out, that there is existing law as to

constitution, but i find this very interesting, too, because what -- what should it be concentration of and about in a marketplace? and i think we -- we don't have this right. we just don't have it right. so i think we have to rethink what it is we're worrying about in terms of any sort of competition issues, and, third, it just seems way premature to be talking about it. >> david? >> well, there's another aspect to this and that is since 1993 congress has wanted the commission to promote small business ownership. it's recognized that from small businesses and including minority and women-owned businesses, innovation often flows, and the mechanism that it set up was designated entities. until 2006 when the commission changed those rules, designated entities were doing fairly well in these auctions and then among rules that changed, one, it said if you change ownership within ten years after you get the spectrum, you have to

discourage, no one writes a business plan that says you can't sell the company in ten years, so not surprisingly designated entity participation in auctions after that went close to zero. those decisions reversed by the court recently and it's on remand. if the commission were able to restore a meaningful opportunity for designated entities, small businesses, innovative businesses to participate in and get a foothold in spectrum and trying new ideas, we probably wouldn't need spectrum caps. >> paul, what's the fcc perspective on this? >> i'm not sure i can speak for the fcc. i'll tell you my perspective on it. i think the debate by spectrum caps, at least as i've observed, is entirely predictable. where everyone stands is really obvious and you don't need a two-hour discussion to decide it. bad decisions made in previous auctions and then you shouldn't

compensate them for that. people talk about foreclosure value, if you have a lot of spectrum, there's some value in foreclosing your competitors from getting more. people talk about competition policy. i think these are all important factors to consider, but would i agree with tom and kathy both, right, which is that i think the dominant factor is how big is the pie, right? there's a big difference between having a discussion on spectrum caps in ten megahertz versus spectrum caps when you're thinking about 100 megahertz so it's a people tomb discussion to have in the abstract amusing though it is, it's probably more to think about it in the context of specific auctions when we have a better sense of what the supply side looks like. >> okay. so i have one more question and then i'm going to open up the questions and there's microphones on either side so if you want to start lining up. one more up here though i have other questions if no one has anything out there. larry, you've gotten off pretty easy. it would remiss of me not to ask about the little swath of spectrum saying that you think

d.o.d. might want to give back so it can be auctioned off. can you talk about the response you've been getting from other government agencies about reusing the spectrum. >> you're killing me, it's 95 megahertz so it's not at little swath. it's a significant swath. we, along with the cc, identified in the plan 2,200 megahertz of spectrum, either for -- that would be shared commercial and government or possibly reallocated from commercial to other commercial uses or from government to commercial use, and when we did -- when we did the plan we realized that if we tried to analyze each of those bands simultaneously, we'd spend ten years analyzing things and not make any spectrum available, so we decided we needed to prioritize, and we looked at -- we looked at a variety of bands, and basically what we're searching for are bands where

there was a large contiguous block, where there was favorable international allocations, where there was existing wireless technology so we weren't talking about r & d on the commercial side, where the location of the band from the technical perspective, it was low enough so that it was valuable -- valuable on the commercial side, and then from the government side, what's the cost to reallocate, and are there bands where you could move existing federal operations? because from the federal side it's not a question of preserving spectrum. it's a question of preserving federal capabilities and operations, so when you combined all that together, this was a logical ban to look at, and there was a great deal of consensus about doing that, including -- including from federal agencies who are incumbents in the band. that process is starting now. it will take until september.

it's very complicated because not only do you decide -- you have to figure out really what's the relocation plan? where would folks go, and what would it cost to get them there, and in the current budget environment, i think the chief concern, beyond preserving capabilities is where's the money going to come from now to do the planning and the pre-move work that needs to be done? so that will all take place between now and september. >> so have you heard back from d.o.d. yet about this, or is that part of the comment process, or how does that work? >> well, d.o.d. was part of the decision process. the decision process was a recommendation from the policy and planning steering group, an integration group that d.o.d. is part of it and they agreed with other incumbents in the ban, doj and others, that this band should be part of the move.

the industry was really most interested in the bottom 25 megahertz of this band for possible pairing with aws, but we decided collective that it made sense to look at the entire band, because what we didn't want to do is move people out of the bottom -- move agencies out of the bottom 25 megahertz of it and then decide, hmm, the next logical place to go in terms of additional spectrum is -- is in the adjacent band, and then we have to go through the time, energy and expense of moving people again, so there was a lot of support for doing the entire 95 megahertz at once. >> okay. paul kirby, you also ask about questions so i'll give it over to him. >> i'm paul kirby with dr daily. that's what happened when the made the change from 1710 to 1755. some went from 1755 to 1850 and it clog that had up. you said we've made "x" numbers. the 115 is in the pipeline but the 95 is not in the pipeline. it's under for consideration. >> when i say it's in the

pipeline, it's things that we are looking at. the 115 is done from our perspective. there's -- there was an additional 40 megahertz, from 4,200 to 4,400, that we all said basically we couldn't do within five years because it required international action, and that's also in the works, so this is something that, yes, it's not -- it's not reallocated, but it's something that we're looking at. >> so the 40 you see is kind of done, pending itu and other. you're waiting -- i mean, you need the next wart to make the next 40 available. >> yes, and there's also some question of what the actual use of radar -- of radar otimeters are in that band that we're still looking at. we decided we need to go ahead with the work process that is so long and so infrequent that if you miss the deadline you're set back another four years.

>> is there any idea to have public workshops or anything like that as you look at the 1,755 to 1,850? >> we're still developing what we're going to do in that respect. >> sure. >> michigan state university. the european commission has a number of programs that we run under the rubric of transeurope networks, transeurope network for transportation, transeurope network for energy and, of course, transeurope network for telecommunications. i'd like to hear from paul or larry whether you all deal with the european commission on this, on these matters, and whether there are any lessons learned from europe on procedures or substantive issues that we need to either adopt or avoid? >> i mean, i can say that we certainly do. we -- we meet with the europeans

frequently, both at sort of more informal itu-type settings and we had a meeting just before christmas with the chairman. we have dialogue with the europeans. they have best practices that can be shared and lessons learned both ways, but, you know, one of the perils always i think of trying to import little bits of policy from one country to another country you is miss the entire sort of structural context in terms of industry structure, consumer behavior, pricing, regulatory regime that is sort of the foundation of the little pieces so it makes it kind of difficult so if i think about the transeuropean networks, for example, a lot of the motivation for those in general was to unify the different countries in the european union and try and, you know, make the european union regulatory framework more attractable. that's not really such a relevant problem for us. on the other hand, you know, there are certainly lessons with respect to how they deal with the companies and how they think about the incentives for the

next generation networks that are relevant and many of the things that we're doing, you know, the broadband plan, for example, that the europeans put out their diversion soon thereafter with very similar goals. >> yeah. would i just add to that, on the administration side, there is a constant dialogue, both at a formal level but frankly also at a very informal level as well and an interchange of ideas that's very useful, i think, on -- on both continents. >> i guess i wanted to get back to the "d" block because i was really intrigued by the discussion and the suggestion of maybe some kind of deadline to deal with that. i just had kind of two quick questions. one was are we sort of headed towards a stalemate here because it seems like we have all the ingredients of stalemate with congress, parts of congress pulling in different directions and, you know, the fcc and the administration sort of maybe in

a slightly different place right now, and then secondly i was just wondering is it at all clear that -- that the -- that the fcc's proposal, which would be, you know, the public safety would get the spectrum, would be able to use the spectrum it already has for broadband plus using other carriers' networks, that that solution won't work and that in fact public safety definitely needs the d-block, because there are some who say they really haven't built a strong case for that yet. >> larry, you want to take that one? >> as to the first question on the stalemate, you know, you can place your odds, but the point is about the deadline is that a deadline both for -- forces action and, you know, you've got to give reasonable time. but whether you think there will be or won't be a deadline is a good idea, right? there's no harm to a deadline, and there's a lot of benefit to

it. as to the fundamental question about allocation, i think what you pointed to is the analysis that we ultimately came down to which is that -- these things are all a combination of a lot of different inputs and, you know, to -- to way, way, way overgeneralize our view is what public safety needs is not more spectrum, but they need money. auction spectrum, give them the money. but there's definitely things they can do if they have more spectrum. it's reasonable to say if we're going to get a whole bunch of more spectrum somewhere else that's going to be auctioned, take the money from that and give the public safety, you know, once in a generation thing, these are all judgment calls, a classical decision and businesses do it all the time. i'm sure kathy's company, the wire guys and wireless guys are argue begun it so, yeah, we came out in a different place but that's not -- but that's perspectly reasonable and perfectly reasonable to come out in a place we came out. again, what i think is not reasonable is to say that

there's some reason we shouldn't at some point say, okay, if congress hasn't acted by this date, then we're just going to go ahead with the commercial auction. >> david? >> i just want to add on the first point i think it is good to have a deadline, and if -- and if presented properly, it wouldn't be a hostile act, you know. it might even be a friendly act. that would become hostile very quickly. and probably to say -- the same with me. i will say, and -- and, you know, this is sort of a compliment to blair and to his team, but i thought that the public safety broadband network plan in the broadband plan, the national broadband plan, was just a terrific piece of work, and that's not just because we want the d-block to be -- to be auctions. in fact, at that time it was assumed that it was going to be auctioned and allocated and that's what the plan was based on, that assumption, but it addressed the technical points.

it addressed capacity. it addressed cost and tried to, you know, and have solutions in each area. in our case we've had, you know, good success doing fetwork sharing on the commercial side. for a long time we had a joint venture with the company called singular then, and to provide service in new york and california, two major markets, and it was with one radio network and two back ends, it split very quickly, and it was very efficient. we essentially shared the spectrum, shared the rf equipment, shared the cell sites, and it -- it went away when singular acquired at&t and didn't need it anymore and decided for strategic reasons they wanted to take it down, but those models would work very well. we've spent, you know, a fair amount of money researching this. we've got some very credible people who put papers in on how priority access works under lte and right -- you know, it's frustrating because right now

it's -- the debate isn't about that. it's not about -- it's sort of more we want the spectrum and, you know, we're going to get it, and so some of the things i'll just say, there are more efficient ways to build public safety networks. new york city put a paper in that showed it had 250 sites to cover the five boroughs. we have type times that. skies cost money and sites aren't free. you've got to spend a lot of capital lobby, but it's free in terms of dollars. to us spectrum sites cost so i would suggest we do a more rational allocation between the two, and we have a much denser architecture than public safety does because also we have more users on it. i mean, total public safety is what, 3 million tops, 4 million? it's -- it's -- you know, we have 34 million. the industry has about almost 300 million subscribers. actually i asked one of my staff, the president announced the goal of 98% wireless

broadband coverage by 2016, and i -- i think the last fcc competition report said that 98.1% of the population has at least one wireless broadband provider so we won. we did it. >> david? >> the question was is it possible for this to get bogged down and to take forever? notwithstanding its importance. i think the answer to that is if this is -- becomes misperceived as an issue that those of us in this room care about and almost no one else does, as just an esoteric question of telecommunications policy it will take forever. if we think back though and paint the picture why did we want this network in the first place? well, it's because in some neighborhoods it takes forever to get an ambulance or a fire truck to come through, because some kids coming home from school are not safe, because of where they live and they don't control, that and i think as a nation we've long ago reached a

consensus that that's wrong, and i'm one of those who thinks that the president got this basically right, but whether he got it right or whether there's some other approach we've got to keep our eyes on why did we want this? why do we need this in the first place? what ideals do we stand for, and if we do that, this could move very quickly and it should. >> in terms of efficiency this, panel has actually provided a great example because we're finished. actually a few minutes early so thanks to -- very much to the panel. this has been great. thank you very much for coming today. i'll turn it over here. >> well, if you'll just stay seated for one minute. i want to thank -- if you -- one more moment, just a couple of housekeeping things, and first of all to thank amy schatz, our moderator. i fear i didn't give her a proper introduction, but let's thank amy as well. as you know, amy is the -- she's the star report er for the "wal

street journal" on the matters that we've been talking about and other telecom matters. i don't know whether she takes notes while she's also moderating. that might be hard, so i'm not sure we'll read all about this particular panel there, but we'll be able to watch it on c-span. okay. now, just maybe two other quick things. first of all, when i heard time warner cable i think mentioned in terms of the recent attacks by the national association of broadcasters, that made me remember, not that i need to defend time warner cable, but it jogged my memory that -- and i posted a blog about this as well. time warner cable has what i think is a very innovative and -- and really useful program to further scholarship in terms of addressing broadband policy

issues. they have already been through one year and produced some good papers. the leader of that project, fernando lagarda is actually with us, so all i want to do is that you can look on the free site foundation blog and find out information about the application process and so forth, but it's a worthwhile program, and then finally, before we adjourn, and remember we're going to move -- when you walk out of here to your left for the lunch. i was just trying to remember whether blair was linking commissioner mcdowell, i think he's actually here somewhere. i don't know whether within ear shot but whether it was stalin or lenin that -- that -- oh, okay. >> i gave him an exit. >> i just wanted to have that correct. again, thanks to that last panel, and amy and now we're going to adjourn to lunch. thank you.

[applause] [inaudible conversations]

>> next come a discussion of immigration policies for highly skilled workers at the farm hosted by the brookings situation looks into reports showing a majority of doctoral candidates in science and math in u.s. schools are from china and india. this is a little less than an hour and a half. >> okay -- here we go. good morning, everybody. thank you for coming. david asked me to do this in a slightly different order than is

listed in the inside program. were going to do it on the front side of the program. so let's begin with bobby hamilton. >> mr. speaker, we have somewhat just go challenges here. look at the first one loaded and then we'll be ready to go. >> the ceasefire. very good. >> good morning. my presentation is focused on doctoral degree attainment by four students that used u.s. universities in the same engineering field. this can be considered as a form of highly skilled decoration for the purposes of education. the findings presented here are from a paper co-authored by myself and my two colleagues from george mason university,

connie mcnealy and wayne perry. angst of the national science foundation for their report. on a personal note, i first became interested in immigration and education in 1989. i just got out of the marine corps and i traveled to tokyo for your comments to the japanese that a local school. not too many westerners in the school, mostly korean and chinese students. and none of the students spoke english so we degree chance to communicate in only japanese. a tremendous experience, but the experience i also gained a great respect for those who leave their friends and families for many years to pursue education in a foreign country. again, my talk focuses on science and engineering doctoral attainment at u.s. universities. the time period covered in this study is 1994 to 2005. doctoral attainment data was

collected from foreign students representing 181 nations in the fight field -- the five fields of study or physical sciences sciences, life science is, engineering, not on accent computer science is in social and behavior sciences. during the 12 year period as the screen shows, the count was 96,466 foreign doctorates in science and engineering field. so it's a generally 100,000 students traina told their time. with their science and engineering doctorates of universities. let's talk about a conceptual framework for the top this morning. this conceptual framework is offered to help better understand the phenomenon are foreign students traveled to the united states for their science and engineering doctoral degrees. first of all you can visualize the pipeline from each of the 480 when the first entry nations

to universities, but also realize the same pipelines are similar pipelines from the 181 nations also extend to other nations with the degree granting university such as australia, canadian and european nations fear the pipelines to universities can be viewed as only one component of a global student migratory network. and further the student pipelines to the united states appear to be facing growing competition from other nations desiring the best and brightest students of the world to attend their home nation universities. it is also helpful to view as home education, that is kindergarten through 12th grade in university education in terms of the domestic student education and screening pipeline at work prior to the students to the united states. all said, the students who have obtained their science and engineering that is in the

united states have traveled a tough road. first they have to pass the often challenging domestic education screening and selection process and then they had to compete with other foreign students to gain admittance to a u.s. university. now let's talk about the role of the u.s. universities. as for the u.s. universities, they have played a greater role beyond educating and training foreign science and education doctorates. the university should be viewed as a global recruitment and quality control mechanism that screens and collects the best and brightest of the world's foreign students for admittance into doctoral programs. it should also be noted that the u.s. taxpayer has not paid for the foreign student kindergarten through 12 in undergraduate university education said that the home university -- and the home nations except the bill for

this. so it seems like the united states has gotten a pretty good deal. that is foreign governments pay to educate their home nations students among the u.s. universities have the pick of many of the best of the greatest weather and science and engineering doctoral programs. alice talked a little bit about the role of the u.s. government. as for the u.s. government, and heavily subsidizes doctoral education to include that for students. the rationale being that there are public benefits resulting from this type of education and research, development and innovation will suffer if students are not offered government and his to stain the deck for a paper in a few. the u.s. government also issued student visas. it should be noted the student visa pipelined was disrupted due to the 9/11 2001 attacks, prompting the u.s. congress to take an interest in helping to

establish a new student visa tracking system. further, foreign doctoral students also appear to benefit universities in a situation similar to on-the-job training, where the students are employed as relatively low-wage, highly skilled research and teaching assistants while they pursue their doctoral degrees. let me just get a drink of water. excuse me. okay. as stated, foreign doctoral attainment at universities is a case of highly skilled migration. what seems to have generated policy interest has been a relatively large increase in the presence of foreign doctoral students on u.s. campuses in recent years.

for example is the chart shows, in 1980 there were less than 3000 science and engineering doctorates at american universities. the numbers 2842. as you see, this represented only 16% of the total, meaning that 84%, science and engineering doctorates attained a u.s. universities were obtained by u.s. sec, the numbers change from 1980, 1994, 2005, three reference points here. in 1994 the numbers increased almost 7000, which is 6950. by 2000 buy the numbers exceeded 11,000. and this number increased the student representation to almost 40% of all doctors attained at american universities. as the next slide shows, it should be noted that there is variation between the five

fields. for example, this is for 2005. as the chart shows, you see a great foreign domination of the engineering field for doctors. 61% of all thought traits in 2005 were by foreign students pay on the other end of the spectrum as you see why science 20% of life-sciences obtained by foreign students coming in at 72% if my math is correct, 72% of all doctors were retained by u.s. citizens. so you see the variation here. so my point is that we want to study the phenomenon, let's talk about a five different fields. as a notice also social and behavioral science is, only 21% are obtained by foreign student. that means 49 were by u.s. citizens. now, the findings of the study are that four nations dominate

in science and engineering doctoral attainment for 1994 to 2005. nations are china, india, south korea and taiwan. if you look at china and india, i think it's fairly apparent that these are large nations -- population countries. and the reason there are many in chinese science insuring doctors is there a large donation populations. what is interesting is the outliers here are south korea and taiwan with relatively small populations, both of these nations and about 10,000 science and engineering doctorates are during this time. so the question more than why is there so many chinese and indians, i think the more interesting question is why there are so many taiwanese doctorates during this time. however, as the time. progressing from 94 to 2005

coming soon to chinese numbers increased dramatically in indian and south korean numbers were fairly static and taiwanese and showed a large decrease. this chart shows the change in chinese doctoral attainment for 1994 to 2005. you can see the screen, let me talk about this. in the engineering field, in 1994, only 136 -- only 186 engineering doctorates are attained by chinese students peered by 2005, the number increased tenfold, more than tenfold to a little over 1500. tremendous increase. as you see that the share of the chinese that trades among the foreign population also in creased sec and the ethical sciences 30%, life-sciences 32%, engineering and math and computer science 39%.

you also notice the chinese representation in behavioral science is fairly small. i think the idea here is chinese students are less likely to become economists and social scientists are likely to become canada's, engineers and physicists. two minutes, very good. i think an interesting question. let's talk about engineering one more time. if you look at the 39% share in 2005 for chinese engineers for the 61% share for all foreign events, what it means in 2005, one out of four doctorates at american universities were obtained by students. and for just a question for me as why are so many engineering.traits on the one hand being detained by students in so few are being attained in the life-sciences compared to american u.s. citizens?

okay, in closing, the best and brightest of the science and engineering student from emerging market nations like china, india, russia and turkey will be an increasingly priced even resource to be recruited and competed over by developed nations with lower birth rates and creasing pools of talented young people. the united states should keep this in mind when formulating it migration policy. thank you. [applause] >> thank you very much, bob. that was fascinating. when the hold ahold q&a until the end i believe. so patrick, i believe you are next. >> thank you. >> so what i would like to do is talk briefly in a non-technical

manner about two research papers i've been working on. the first one is about the students at the university and then everything about the project. the first speaker in keeping motivation for the paper i'm going to present, let me show you more numbers in the same line. so if you look at the population of students who finish degrees in the united states then you look at where the two got the degree, there's a surprise that more students had come from the same university in china. so, maybe it's because it is quite surprising that you take

someone who finishes a decree from the u.s. university is more likely to have done the degree at the university for the institution. so, the fire slightly deceiving because there are many good u.s. universities and not many good chinese universities. the figures i represented earlier were about 15%. overwhelmingly, we see a sizable fraction of the science and engineering workforce in china. about 9% were born in china as

of the 2000 census. if you take them altogether, about 47%. so is the leader of the contributions to u.s. science, one of these papers was on joe soprano. and i can get into a discussion about exactly the contribution of these papers. what is more interesting as all these papers came to the same conclusion, which is that migrants make the populations and contributions intend to be more productive on average been looking at science and engineers. so in my own work, we have something quite similar, but a bit more specific about the students. we're asking if the chinese students during this compared to the students. so we have agreed that i'm not

going to give and not. we have about 16,000 students graduating from universe these in 2008. about 16% of which are chinese. and for a couple reasons we also could have a national science fellowship program. so it's a very prestigious award for u.s. residents who wish to pursue the training in u.s. universities. so, these are the results. i apologize for the technical table which is coming from the paper is held. so we are looking at what compares among three groups of students.

and in that table they can mostly be interpreted with differences. so the chinese students are about 25% to 40% low productivity of students. what we do in current one is put all the students together and then to compare students one and the same programs. and in the same advice he appeared as result. if 20% to 25% more papers and that is why we have the numbers and fellows. and you can see the difference between the chinese students and other students are same order of magnitude. so many students do almost as well as the fellows. at least we extend the same

programs, so we're working with the same advisors. the interesting part is why is that the chinese students do well and so stories are following. they have announced a man for education, but to another sound, demand by chinese universities have present. so there are demands for quality education and student identified however, u.s. admission like formulas to the chinese system is going to be more difficult for chinese students to get on the program then it is for american students. the first evidence is the case. but the other part of the stories if you're in china and you want to get your degree in the u.s., you need to have an undergrad degree for one of the most prestigious schools to get

into the program. .. the other thing the professor is only as good as the student because the student learning the experiment and so the access to

high-quality talented students enables universities to produce more of science. a number of limitations is we don't know what happens after the deal so we don't know if -- we know what the chinese students say in the u.s. but we don't know whether conformed their students so we know the differences continue over if the engineers and it could be the chinese students may lack some of the skills which may be important. 1. i need to emphasize it doesn't follow from the fact whether the chinese students

have a strong publication but the difference if it is good for the student is good for america. there's a couple arguments and the one is that chinese immigrants may reduce incentives for americans to engage for instance by reducing the wages. and just who this point besides the policy that could be used to address the concern and in particular the number amount of the nsf could be increased to make the carriers more attractive for talented americans during this immigration policy and since i have three more minutes, let me talk about my paper on immigration today speaking we don't know much about mobility choices in the u.s..

we can not to a certain extent surveys but we don't know what happens to them, [inaudible] so chemistry, a chemical engineering departments and volume of the serving there is 17 years and the underlining population with some caveat. so i am following the careers move. it is quite striking when the sense that only about 9% to some country, so about 91%.

90% stake in the u.s.. there is no return to china and india contrary to what you may begin newspapers. it seems like those who return to this selection of professors who are in good schools are likely to return to their own country. despite some recent concerns the united states remains a very attractive place to do science. [applause]

>> good morning. i would like to thank david for inviting me and brookings for hosting this session today and you for having an interesting topic. but like to do today is present some ways of thinking about immigration, skilled immigration and policy responses. it seems a lot of our thinking certainly about skilled immigration as well as between to characterize it these kind of polar opposites. we need more that generate unusual productivity and jobs. or we need fewer because they compete and they reduce opportunities for domestic students. i think by the end of this you will see i come out with a third way f. thinking about things. and i want to kind of build a little bit on what you have been hearing here as well.

immigration policy crudely speaking has two important things it accomplishes. one is to set the numbers we emit and the offer is to control the quality. are we getting the best and the brightest? the numbers thing is fairly easy to understand, the pressures that set the demand for more or preferably designer for lower supply. but the other thing that is happening is globalization, and globalization and really skyrocketing education rates in many countries is changing the nature of both the student marketplace can't the possibilities we have for admitting the best and brightest and want to discuss that. selectivity earlier is kind of a social science concept many of you are familiar with. it's how you actually get the best and brightest. the forces create the demand for the best and brightest migrants to come to the united states. i've got 12 minutes, going to skip some of this.

i've got too many overheads. i would welcome you to listen to what i'm saying and skip them a little bit. but i want to do is set up in this slide when i'm going to be discussing briefly which is do we have evidence of past shortages in science and engineering, what evidence we have in the medical restriction when we look at the labor market outcomes and what will the future bring? do we admit to few? if you look at this slide some of you have seen this. the reason you see the bulk of a lot of phd students from abroad in the u.s. population at younger ages is because we admitted a lot of skilled migrants in various kinds of fields as well during the latter 1990's and that was set in place by the 1990 act and say that.com boom which changed the nature of demand and supply both the

policy of the labour market level. so in fact you look at this and arguably we admit a lot of doctoral students but even masters students it shows up in the data. there are the foreign students. now, what you see there is a big dip in 2001 but you also see a big dip after 1981. what's going on in the economy in fact a global economy affects student supply and flows into the united states and arguably the 9/11 affect was pretty minimal and i have data to suggest that that was the case. the numbers have again started to respond to the global economy. as the inflow of students in china and india is down 20%. i assume indy 500 is down 20% similar to what it was after 9/11. it's the economy. what's unique about what's going on right now is there's been a 40% increase in chinese students the last couple years so chinese students are coming to the

united states in record numbers and there is such a large group they are offsetting which would otherwise be a decline in student enrollment in the united states. but think about this in terms of globalization and like market share. we know that the u.s. market share of international students start bum 25 to 20% over the last decade. people say that's terrible. yet at the same time the number of students in the united states increased by about 20%. the six nominal rate of increase. if jazz is the case we are seeing the nonlinear growth of students in a source countries, for us to read game effort of the international student marketplace like we did 15 years ago we would be upwards in the u.s. institutions. can we absorb that have any stance, how would it change the nature of the education? and for what does it mean to have shortages? if you looked on the box here

and you can't read all this stuff in any great detail wage changes lag by the professions. the person who looks at this says it is difficult to understand why an industry with a high level of demand has few gains. and i play another game. i took a projection. this is a few-years-old. this is the total number of computer scientists and engineers have 2017. i then looked up at rates of employment and extrapolate the mountain to the future and the residual then is what is with foreign-born students and the skill of migrants and the increase from 18 to play for% of their share of the particular

occupational sector. here's the two things i want you to keep in mind. one is that is an increasing share buy almost one-third in terms of foreign-born in these occupations. and here is the other thing that is interesting. at the current level of immigration the numbers we had met annually we will hit that coming enough for unskilled workers to meet that sizable gain in foreign share of the labor markets. now let's talk about the globalization and selectivity a little bit. i want to talk about a couple of different examples so we, for the oracle are moving from quality. the noble laureate for the cream of the crop they are also a small number so when people see this the business the example and think it's a small number. i agree with their systematic of the phenomena that i'm talking

about when you have big barriers to migration say the chinese example, you create an environment you are highly selective of those who can move and bear the cost and have the special qualities that make the move across the international boundaries payoff. so we know for example that the immigrant share of the nobel prize winners has actually declined. that's the globalization. globalization shrinks markets, lower the cost of mobility and therefore is less selective. you can certainly see it here but another remarkable way, too. that is the immigrant share of ph.d. labor markets has actually increased while at the same time to share of the nobel prize winners has decreased a bit so there's a decreasing selectivity in the two ways you can see.

are there other ways in which you can see this? well, this is an ugly graph i realize. it was better when i did it last night. what we have got here is three different fields. the point is this is the ratio of educated and this is what the data permits me to become educated life and physical scientists about 35% more likely to have a college education than natives. that is out here back in 1950. but the ratio of education advantage has been going down. same thing with engineering. and then life science quite different and that's fascinating. but remember, excuse me, information technology. remember information technology is a bit odd because a little under 10% of the i.t. workers don't even have a degree among of the domestic labor force so it doesn't need to be more

educated in that context. earnings ratio have gone down. again except for i.t. which is strange. basically over time with this is is what we call social sciences the selectivity. it shrinks the labor markets, decreases the selected the of migrants and you see it in terms of the religious education to the labour force and in terms of the relative earnings. you are going to hear from life think dr. hunt and others and you heard there is a lot of good evidence that both workers and students are productive. or they uniquely productive as the question. one thing you also hear about and we may hear it from david is the rate of start-ups. depending on the data you get, you get somewhat difference stories about the relative productivity of immigrants.

but what i want to look at very quickly is this idea of corporate leadership using just simple data. what we can see is that if a national level of the united states, about 12% of the workers in the information communication technology industries are self-employed and a large share, a fairly remarkable share of ceo business owners and silicon valley which you probably can't see too well on less you look at what is said here quite a bit remarkable in silicon valley in terms of basically directorship of corporations, yet fair share of the labor force is higher. so we're in my going -- where am i going? i want to return to the quality,

numbers you can sit in different ways, quality is also set by the marketplace but it's also uniquely set by policy and there's three different philosophies i think generally. one in 3i opened in the presentation with. you can set large numbers in the market will sell for delete. meek policy process in less. not simply to facilitate the migration but to make it painless. talk to anybody yet it is this a chore department, hiring people is not painless. it's not clear that at a meeting migrants' need to be less painless, less painful than just doing good hiring. the 2006 bill that i mentioned, at 261 he lived in what have increased the scope migration over fivefold with escalators for h-1b, but it would have set the system pretty much the same.

the numbers increased in that way i would argue would have an adverse affect on the selection. on the bottom end, there's an argument we have an oversupply of highly skilled workers. the third way which is number two is what i suggest people also consider which is balancing numbers. thank you. [applause] >> thank you. finally we have gerald. >> thank you, mitch. but i would like to do is focus on the policy aspect of immigration specifically as it relates to how your education building on the interesting papers and analysis that has been presented here. i want to start with some brief remarks on my immigration took -- book. what i do is our duty to

immigration reform in order to boost long-term economic development and productivity beebee i also put a picture of albert einstein on the cover of the book just to remind all of us about the many contributions immigrants have made to american life over the years. we all know that it was surrounded by hamdi and indian, google was co-founded by a russian immigrant, dahuk was established by someone born in taiwan, and ebay started by someone in france. but with the american economy look like today if intel was a hungarian company, google was based in russia, yahoo! was a taiwanese company and ebay were french? inr do these are not isolated stories. studies found many silicon valley companies have a foreign-born founder or cofounder. immigrants have made a vital contributions to our economy, just this morning we have heard very interesting examples of the rule of international students in terms of productivity.

we've seen in the paper just the rising number of foreign students over the last 20 years. patrick documented the higher productivity. lindsay had some very interesting nuances to the story in terms of workers shortages broken down by steel and we see some of the interesting contrasts and between the i.t. field versus the other areas and then leader on the second panel you will hear more from david about the role of immigrants and students in establishing start-ups. so i think it in a lot of respects there is evidence about the contributions that immigrants make, yet when you look at our politics, our politicians are paralyzed by this subject. and it's kind of ironic that it's been difficult for the political leaders to address immigration even though virtually every but he dislikes some aspect of the status quo.

and i think the problem with the immigration area is people perceive the cost as being high while the benefits are low. in that situation no big surprise, the policy area becomes radioactive for politicians, it becomes hard to resolve. there's a lot of emotion, there are many false information surrounding the discussion. so one of the reasons why we wanted to put on this forum today is to object some facts into a very emotional and polarizing topic and it's not like everybody is in agreement on what the facts are, would i think it is both interesting and important that there be some factual basis to these discussions so we are not just making decisions based on opinions, ideology or false beliefs. in my book by make a number of policy recommendations about various aspects, but i want to focus specifically on the international student aspect

because that is what this panel was really focusing on a sound is a very interesting in roberts paper that he's found that 38% of doctoral students today are coming from abroad. yet very few of these people actually have an opportunity to stay here. one of the suggestions i make in my book and others have made the same suggestion, for example mile to the coming year michael bloomberg has talked with this as well as automatic green card for for individual american science and technology ph.d. programs. and we are not talking about a large number because if you look at roberts peter, it's not a huge number that is required. but in terms of the quality, the possibilities for innovation, and the opportunities for the entrepreneurship of i would argue that the economic and it fits or huge. certainly when you look to the information technology field,

the dot com or foreign students who came to enter ph.d. programs, there certainly are a number of examples where these individuals have made a dramatic improvement. now we could trust the market and there certainly are some policy mechanisms that are in place to match up the supply and demand in terms of the need we have for science, technology and engineering and math students. but we need to keep in mind that the job opportunities are starting to change. you know, it used to be that we just needed math students were hired education to jane teacher mathematicians and so on, of it in recent years, we have seen the world of finance start to high year mathematicians. they are starting to take some of the people that used to go into high gear education and

become college professors, the hedge fund companies, private equity firms, the risk assessment and officials are now starting to train some of these individuals. so i would be very interested in seeing lindsay's paper projecting to the future that when you start to see greater demand across a variety of different areas, not just traditionally science and technology for people with ph.d. s in this area. it's a mismatch when to become larger. is it actually going to become a national crisis? so for that reason i feel we need to become more productive as a nation. we do need to think about some of the policy actions designed to fulfil fields where there are likely to be shortages and if you take the results of david's paper seriously if we did with the entrepreneur aspects and the

startup aspects these are the people who are going to innovate, create jobs, build businesses, they are going to be major parts of the u.s. economy so much as think we need to get more strategic in thinking about the need for high skilled workers and the role of international students in that area. thank you. >> okay. thank you all. have i forgotten anybody? i don't think so. well, we've cut to our time and admirably. in fact we are ahead of time so lots of opportunity for q&a. i would like to start if i might use the moderator's prerogative. of course we've been hearing about the immigrants and the contribution they make. but we also regularly here anguished reports about the state or state of the stem education in the united states. actually every country seems to

moan about that. and the implicit in education there is not always being discussed is just the assumption that we need more people in these fields. and yet, lindsey, you were talking about maybe there is a supply problem. do we seem to have enough? we seem to have foreign students clamoring to come in. so how do you -- this is a big question, but how do you bellman's the immigration issue policy debate with calls for improving our domestic supply of scientists and engineers? am i on? boogerd. thank you. this isn't an easy not to crack. on the domestic side of the work i've done with my colleague at rutgers certainly suggests some

of the simplistic ways in which we think that there's a lack of supply in the pipeline don't measure up. about one-third of incoming freshmen of the last decades said by one to study in stem fields so there's no drop in interest in terms of those who are capable. high scores are naturally not. if you look at international tests we don't do that well but then remembered as five, six, 7 million stem workers out of a labour force over 150 million. how many highly skilled people, how many top percentage of the s.a.t. scores you need to supply the labor market? now darryl brings an interesting initializing and at its extreme it gets into an issue of science citizenry and this is an old thing that's been around a century or more, the idea that to be an adequate member of the modern society you better understand science.

at the extreme it's hard to know how to deal with that. i fink it's true but how much science to you need to know. if you look at financial industry, a large share of the workers in the stem occupations, but a small sector role switch ascent psychiatric yep. another way to look at it there may be 15 million people in the united states would extend education and maybe one-third of that in jobs so clearly some of them are working out side of stem and that is a good thing but how many more do you need? and that is a hard nut to crack. did i answer? >> just one comment. i believe that saltzman also points out when compared to foreign students coming to rest citizens tend to leave the pipeline earlier, and the sense is that talented americans don't stick around to get their

doctoral degree. the greater tendency to enter the workforce, so at a certain point when you compare the of foreign students with a u.s. citizen students you have two different populations and i don't want to misquote or misrepresent views but he seems to suggest the best and the brightest tend to leave the pipeline earlier where has the most talented of the students tend to stick around and get your doctor if. >> that's not right? >> okay, please, correct me. >> we just worked with about several longitudinal data set and looked at progression from the pipeline from high school to college into the labour market from the 70's to the 1990's and the early part of the last decade. what we found is that the change or the rate of attrition in the pipeline college, master's, ph.d., labor market, three years

of conflict, six years out the transition hadn't changed much over all except for interestingly, and we didn't break it up, in the 1990's there seems to be a dip in retention and stem high year degree among the top quintile performers and that is an odd outcome and we don't know what's going on something did happen in the 1990's in the top performers. >> i believe there are microphones coming around. i believe you are first and then the gentleman back there. >> thank you. i'm a congressional correspondent for the hispanic out of higher education and read a lot about immigration and i've written a book on immigration and the american dream. being a journalist to have questions for each of you, so please, bear with me.

patrick, i wonder if you've studied about the clustering in the various universities in certain geographic areas lackluster in one university say a scholar from that university. i wanted to ask you more about that with the wages tending to produce as the foreign student population and i haven't heard that 90% before. i usually say 70%. so that's really huge. and i wanted to ask you about the numbers. you said there's a few, but as you were saying, something like the actually hit the peak 600,000, over that peaked couple of years ago and not as close to

700,000. the majority of the students on a foreign student visas on the 700,000 the majority are graduate students, the majority of those are in stem. as we are talking to hundred 50,000 people, and if they are given automatic green cards, i would think that is a sycophant number. xu could you talk about the number and then -- yeah, they are not all noble laureate, so we are talking quality of 250,000 plus and it's retroactive we are talking maybe a million people. and i would also like in the politics of course the whole of their politics recovery is on the low-skilled workers and i think that you and i were talking at one point that this is a zero sum game if we are electing green hards come into the foreign students that it may be at the expense of family visas and i find there's a lot

in the hispanic process particularly who are against that. >> patrick? skilling we definitely have the clustering of the chinese students and so then universities if we get in why you 50% [inaudible] if you look at the labs, headed by the chinese professor of about 14% chinese students, much higher. an intriguing fact [inaudible] doing very well where you have one professor saying [inaudible]

>> again stem the immigrants were better educated so the nominal earnings tend to be higher. the point i was trying to make is if you use wages has another way of looking at some activity, but burns premium over the last half century kind of thing and there's different ways you might want to think about that was a new set of slides i produced. i like to do something new in my presentations. i was also doing simple regressions on the wage differentials and it turns out that of course the immigrants don't have the differential earnings in the stem fields. jennifer is not here. that has a heavy caveat by again classified missions to the policy is a screening mechanism

and it's a big difference in the outcomes so policy matters. >> peggy had interesting questions in terms of the numbers and we gave everybody in of american green card and i guess i would argue that the number of foreign students here today your taking of the undergraduates, taking out a graduate students in the bonn stem fields and taking out the people who drop out along the way and they do start to drop the the question is let's say the number is still a big number we don't have the best device for picking is going to end up starting google or equivalent

type, the probability of being able to find those people and keep them here. so the spirit of the proposal is designed to expand beyond what we have today because today we read the opposite of the spectrum where they are so few or to veto forced to have an opportunity to stay here until they have found a job and are able to qualify for the visa through their employer. then on the zeros some between the high school workers it becomes easier to sum game only if we stick with the current number either permanent or temporary visa that we provide. in that situation then there is tension at the high skill and the low-skilled area but if we ever reach the point where we increase those numbers it becomes much less of a zero sum game.

>> i want to throw some of these policies of there because they are tricky. there is a select, you give a green card to four and a graduate degree and they can stay in the united states. i had the following issue with that. if you look at the australian experience the where they gave the land to the graduates it included a decade of problems because it created the wrong incentives structure. what happened is i hope this doesn't surprise you, the students came to australia to get landed. so the incentive structure you build is important in greater numbers will not necessarily yield you greater results. you have today designed the instructor right. it is a right way to go in terms of setting the incentive structure for the research and study which is what we want our students to be. >> [inaudible]

the microphone is coming. please, one question per person. and with a think tank called immigration studies down the road from us. my question to this all male panel is why hasn't anybody mentioned the tension between essentially male overseas phd students and residents of this country who are female? i also would note in passing and i think this is correct in the area where the percentage of the foreign-born ph.d. is the smallest which is the life science is also the area there are more women presented the and the other four fields.

thank you. >> thank you for answering that question. >> george mason and i are beginning a study on the gender issue and i think it is fascinating. what we would like to do is take a look at the demographics as a presentation i gave break it down by gender to see if there is an association to the nation's tend to have larger or smaller representations' in the male or female populations. but the question that i asked is there a large untapped population of talented women out there that are not being recruited to u.s. universities. so give about a year and i will get that. >> okay. there and then we will start in the backed. >> i want to ask a little bit

about your data about the entrepreneurship. you gave it samples of intel and google. there's two types of immigrants involved in that. one that comes here to stay and one that came for political reasons either with a visa not massaleit study but for the political asylum and both those examples intel and google are the latter -. >> response? >> [inaudible] >> would anybody like to comment on that? >> in that case, back there.

yes. >> my name is jennifer miller, a candidate at chapel hill and this question is for david hart. to mentioned the counterfactual what this intel were hungarian company and google were a russian company, but do we know that that is the alternative outcome or perhaps the entrepreneurial stories do to some of our other institutions around the entrepreneurship in the u.s. and let that counterfactual be that we would have waited a few more years before the companies were founded and then the u.s. companies by the next person who grasped a similar idea. >> good question. counterfactual hard to test by definition but it is apparent in

the united states is growing competition for entrepreneurship especially in the i.t. area. the president of russia talked a lot about trying to create a russian silicon valley so they are very much devoted to training their students and keeping them in russia and building the company's. we see the same phenomena and a number of tikrit asian companies -- countries, so i guess the world i would have is when you look to the future with so many other countries seen the power of information technology as well as life sciences, the link between those areas and economic prosperity and job creation, they are now basically trying to keep the students home so they can get the benefit of the contribution. that would be the thing i would worry about as we move to the future. >> yes, in the same row.

>> hello. my name is lawrence. i'm working on my master's at the same and i am also in the immigration paralegal so it is a great intersection of the two interests. i'm curious as to think particularly for the indian and chinese nationals if there is any evidence because of the visa regression in the category to stay in the pipeline and to be extra productive with their scholarly work to be in that eda one category. is the nicotine to our right -- i think you are right but it is to distinguish between the fact that the tide of students who come to the united states are different from some other.

>> i would only add that it is typically scientists so i'm not sure that it applies to the student model. estimate to have a question regarding a very small snippet from the presentation where you talked about data that indicated a high your presence of immigrants become interested in science and engineering possibly the there were fewer americans actually just interested in pursuing it to that level, so for anybody that wants to answer this, what is the best incentive people seem to respond to? is the wonder of science and that when people come together ph.d. and stick around, is it for cash because someone

actually said the decrease in wages could be the reasons your interest and finance is draining the mathematicians, so what do we need to instill to actually get people here to get interested in science and to pursue a because it's important. thanks. >> if you look at surveys they will tell you the reason they come to study in the united states is the quality of the institutions and also science. if you, like a good social economist, kind of look at the data, what we find is economic incentives really matter to the flow across the countries. there is a fascinating piece that looked at the availability of the slots and its impact on the performance among foreign students and it has a positive impact. the story is that there is a labor market motive as well. creating the right incentive structure is difficult to do. one of the things clear is you can't simply janeth the supply

side. to have to have the demand side. to stimulate the demand side don't get wage growth and if you don't get the wage growth you don't attract the domestic labor force and probably in the long run you don't have an impact on the call dever. tecum -- quality either. >> [inaudible] i have a question about [inaudible] how many people are getting a ph.d. and going back to their country. could you say that is related to reasons like [inaudible] a system where they can study in the streets with their family. how much impact would that have to the american economy? >> that's a very important

question. if we said to the automatic green cards for ph.d. graduates and science and technology field how many would actually want to take advantage of that as opposed to going home? i'm thinking in the past more would avail themselves of the opportunity to stay here because of the opportunities but i think moving forward this is where the united states is facing more competition the those home countries are making a major effort to bring the students back into the economic opportunities that are going to be available to the students especially those coming from the asian countries is quick to be a huge. we have seen the estimates that by 2015 china is going to have the larger economy than the united states. so i feel when that individual student is making a decision do they stay in the united states or do they go home? there are a lot of factors that go into it in terms of family reasons, the situation in the home country as well as the

perception of the economic opportunity. >> i have a question about demand and supply and how to measure these things. we are talking about high skilled workers overall. how do we understand the demand for workers? how do we measure it, and what do we know about international, the international selection of workers into the stream? it is a question about our economy. we are going through the restructuring right now. what do we know from the past, how we understand the demand at this point?

>> [inaudible] >> well we don't. [laughter] but we do look at certain indicators, levels of unemployment tend to be low. we look at the wage change which has been low and the demand for lawyers can increase wages city, 40% over a long period of time. why isn't changing at all? why do they tend to lag other professions? do we need that many lawyers? i need lawyers, don't get me wrong but what is the relative demand? we don't know. but we do know one thing very quickly and that is that supply will respond to the wages and so if basically if employers put their money where their mouth is they will stimulate the supply. so in a simple way that is one way to look at it. the complex answer is we are looking at the wires commissions to do this stuff and the u.k. is an interesting example. really using multiple ways to

try to determine the demand, and the standard critique i get to my presentation, how about petroleum engineering? it is a booming field. yes it is. so it doesn't match up with when talking about in engineering generally. as a to get to that level of detail which is within four years care about, the economy cares about, but darryl cares about what he's talking about certain mathematical occupations. it takes a finely disciplined kind of approach. my approach is probably not to try to over fine-tune things which set the appropriate incentive structures and let the market worked out. senate hello [inaudible] starting a project on the eshoo minn migration. my question is for everybody on the panel, and what aspect of

the topic we are talking about today do you think would be the most useful for the u.s. public to discuss? thank you. [laughter] >> that's a very good question obviously since we are having trouble answering it. i would answer by saying the problem i have with public discussions in cut immigration area in general is just how emotionally this and not linked to facts. i often like to contrast our discussions about immigration with our discussions about social security. social security is seen as a review active issue described as a third real. politicians can't address it but the difference in the security area is their tends to be in agreement on the basic facts and people argue like cats and dogs

over the interpretation, with the policy ramifications are, how we should address things and so on. the problem in the immigration area isn't not only are we getting over things, we are arguing over the basic facts, so what we try to do this morning is just try and provide some empirical evidence to address these things so what i think the public needs to understand is what the facts are of the situation and it's not like there is always going to be a complete consensus but that is what distinguishes the immigration area from other areas and the reason why it has been so difficult for our country to address. estimate for the general public i think it is useful to say that there's a lot of talented people in the world.

if they have used for those folks then what's the problem? if you see the migratory movement student is a doctoral degree is the united states or china or india and the of context in china and india and some of the research shows the contacts both in the u.s. and china were u.s. and taiwan it is a win-win situation. for example the company might be started by a doctorate of silicon valley. john azar created in the san francisco bay area and maybe in taiwan and maybe there is an offshore somewhere else in mexico, whatever. this isn't a zero sum game, this is a potential for the wind when. people are able to go where there are jobs there are good

things that happen and the challenge for the researchers to quantify that and make the case that this is more. the challenge now is to get evidence to show how this makes lives better for other nations in. >> it's not normal for somebody in education. >> consider this. the gnf did an international survey and asked people in the united states what portion of the united states population is foreign-born. they said about one third. that is double the actual percentage and the set what proportion of foreign-born are undocumented in the legal residence and they said about

half. kuwait at the national press club to make an interesting point they may not be knowledgeable but maybe they are why is. about one-third of the population is foreign-born and their children so what do they mean by immigrant? and those that have survived in the last decade are authorized and unauthorized migrants succeeded the migration for a good part of the last decade. so how much more do we need to educate in what way? i think from my presentation what i would like the public to understand is there is a trade-off between the numbers and quality and sitting incentive structures is a very difficult thing. possibly and there may be a few that disagree with me. we still have more as a model like canada and austria when you have responsive. the control of these things with

oversight sciu get the instructive correct. >> would any other panelists like how this should sit together and there's an optimal mix of the two. >> [inaudible] >> we need a lot of creative thinking. there's a visa which would do away with the system and one gets visa a lot of smarts to

that. the h-1b number exceeds. even if the country capps you're not going to get around that. the numbers don't wash. it needs to be smaller and i'd say more temporary. it makes it a true temporary and if you did that, expand the hb we would be in a much better situation. >> the panel seems to imply it is a u.s. problem. we need immigrants to grow our country to emigrate to be successful. what you're implying is there is something really wrong and we want to fix it with immigration

and i'm not sure they believe that or is immigration some of their bigger issue about american exceptional as some. this economic issue i'm not sure there is something really wrong. >> i would answer that by focusing on immigration and the president and state of the union address talk about the immigration for long-term prosperity job creation. i'm interest on the immigration angle because the tide of immigration and innovation. i think there are links between the two of the various levels we've talked about in terms of start-ups and contributions to the knowledge and so on and that's the crucial link. the united states as the

guilaume innovation in the past. the worry that i have is going forward if we don't do as well what is that going to mean for our economy over the next to estimate time can jacobson, a recently released democratic staffer. on the incentive structure is one of the problems isn't the market trend to send both productive capacity and high skilled jobs to other countries in recent decades and made the compound now by what we've seen in the last couple of years in the market lack of investment at

home companies are sitting on a lot of cash. i wonder what message that sends to people about whether the skills are going to be applicable with places like eg and intel doing so much research abroad. and somewhere else and they come here so presumably they are willing to go someplace else or go home. they tend to believe you're the number one country on earth and so why would they want to go someplace else. wim wondering about is in the absence when it comes to innovation it seems from reviewers at least from what i've read about in silicon valley if you have to start a plan and part of the work isn't being done in asia you can't

give in to talk to somebody. like question is in the absence of the clear future regarding either productive capacity in the united states and commitment to corporate research in the united states and we are going to have a great deal of success in young people who are american citizens in the scientific careers. ..

>> i mean we can solve that problem in several different ways. but if american students are not studying the s.t.e.m. field and we're not providing very many opportunities for the foreign students who are interesting to stay here, that has the makings of a crisis. >> yeah, one thing, i certainly do agree on, which is the number of foreign graduates coming out of our institutions isn't so large that it's going to tip things usually one way or the other. it's an important resource. most of us do believe we benefit from migrants, and at least we know the system is running in mud. it should be fixed in some ways so we don't have the bottle necks and -- that we have in so many different levels. but, i guess, if you had to really simplify the question, can you resolve the innovation

issues, basically what they call the american fear of being a diminished giant. can you address the demands and fears on the supply side. i think arguably no, you have to have heavy investments in r&d. what triggered the sputnik moment was investments in military. we are that way now. in other words, i think you got to work on the demand side as well as the supply. we can over focus on the student issue altogether. the domestic pipeline, i think, will respond if appropriate incentives are there. >> i wish we had more time. it's been lively and productive. i want to thank you all and invite you back for the next session. [applause] [applause]

[silence] [inaudible conversations] >> more now from a brookings institution discussion of immigration policies for highly-skilled workers. this panel focuses on the u.s. visa system and why some highly educated foreign workers don't use their science and math degrees in their work. this is a little less than an hour and a half. >> very good, i'm the editor of "science and technology" at the national institute for science and technology. i will be the moderator. i will be introducing the speakers. this time the panel is going to be sitting down below so that -- they will all come up here at end of the presentations. we're going to start out with

john batalova who is an analyst with the american politics institute. rather than wasting times on backgrounds and so on, we're just going to jump right in. so. >> good morning, everyone. i'm jeanne batalova i'm from the policy institute research organization that deals and studies in depth various aspects of migration and immigrant integration in the united states and other countries. it's a really great pleasure to be here and to share the work that my colleagues at mpi has been involved in the last few years. i'm going to talk about something that the first panel

didn't touch on. and that is what happens to immigrants once they come to the united states and they do have college education, and then they find themselves in the situation when they -- their skills, knowledge, education is not utilized properly. it's a phenomenon called brain waste. you'll hear a lot about it today. so how many of us run into an immigrant taxi driver who runs a complicated computer program with his eyed closed, or perhaps over heard the medical transcriptor who used to be a physician in her home country? or hired a contract help who apparently has an engineering degree from abroad? how many skilled immigrants in this country who find themselves either unemployed, or employed

in jobs for which they are substantially over qualified? who's concern should it be when skilled immigrants in the united states, instead of becoming google and yahoo!like entrepreneurs find that their skills education and drives are under utilized in the labor market? what are the opportunities for the public and private sectors to address such brain waste? these are the questions that i'd like you to go over with me today. in our efforts to quantify brain waste, we focused on college-educated immigrants ages 24 and older who were either unemployed or employed in jobs that require no more than moderate on-the-job training. so these examples would be construction labor, file clerks,

cab drivers, nancy -- i'm sorry nanny, parking lot attendants, and so forth. what we found was quite disturbing in our opinion. there were more than 1.5 million college-educated immigrants who were unemployed or working on skilled jobs as of 2009. 21% of college-educated immigrants, two one in five, were working in unskilled jobs. that's compared to 17% of the college-educated u.s. workers. and another 22% of immigrants were in what we called semiskill jobs. so these jobs require long term on-the-job training, perhaps an associate degree, but less than

college education. that the immigrants have. an example for the carpenters, electricians, massage therapist. we also found that -- well, the brain waste is a reality. that's our conclusion. but we also found is that the -- some groups of immigrants are more prone to face brain waste. we found that 43% of recently arrived latin american immigrants in recent arrived adults that came in the last 10 years, and 36% of african foreign-educated immigrants were working in unskilled jobs. longer residence in the united states typically is associated with improved outcomes, however, we found that nearly -- almost,

a bit more than 1/3 of latin americans who have been here for at least ten years were still working in low end occupations. the next slide takes -- is an analyst, it's based on our analysis of job quality of legal permanent residents. it's a survey, there's -- the data from the national immigrant survey that was conducted in 2003, and unfortunately, that's the latest data that we have available. but -- so here we'll look at green card holders. and those who had obtained their agrees abroad. we are able to track the jobs -- the job quality from the time they left the united states, so their first job, i'm sorry their last job abroad, their first job

in the u.s., and their current job. and i'd like you to pay attention to three patterns. first of all, immigrants who's admission was based on employment visas, so little change in their job quality over time. for all other admission categories, there was a decline following the migration and subsequent rise in job quality. the decline was deeper for those who came as refugees or diversity immigrants, the green card diversity lottery, then for family immigrants, who often can count on relatives assists them in the integration process. but also -- let's look at the status suggesters, versus new arrivals. quickly status adjustors are

immigrants who receive their green cards while they are in the united states. after spending typically sometime in the united states and a variety of temporary visas. what's important is that status adjustors have better relative outcomes over time that they are new arrival counterparts. in part, great exposure and experience in the u.s. labor market. adjusting to a new labor market is not an easy task. many highly skilled immigrants experience a sharp drop in occupational status when they arrive. what are the main risk factors? we found that lacking english skills was one of the biggest barriers. and let me emphasis that we are not talking only about english vocabulary, or proper grammar,

but the ability to communicate effectively in the work environment that many newcomers lack. having just a four degree, our analysis shows that those with the u.s. degrees with three times more likely to be in skilled jobs. u.s. experience, that's what u.s. employers want, demand, and really rely as a -- rely on as a -- in their assessment of whom to hire. those who answered the nonemployment based thesis, those who came -- the country of origin, the region of origin matters. lacking u.s. professional and social networks is a huge barrier. but there are also institutional factors that are absolutely have to be addressed.

immigrants often face substantial difficulties in recognizing their foreign credentials and work experiences. they lack, as i mentioned, professional networks, mentors, and the procedures to learn how things are done in the field of study. so -- i have -- okay. four more minutes. just very quickly about other institutional barriers that we found in our research that has been again and again huge obstacles. lack of state specific and occupation specific information about steps that are needed to pursue former careers. gate keepers, we have two major gate keepers, professional associations that set rules.

state by state. that have often with protectist instinct, as well as employments who lack knowledge and competence in hiring international-entering professionals. shortage of quality programs available to newcomers that target work and language training as well as job search and interviewing skills. so given what we heard in the previous session, we also know that highly skilled immigrant is important for innovation. a competitiveness, createtivity, academic, and excellence, and expansion of knowledge and so forth. i'm not going to talk about why brain waste is on important issue to address even when the economic recovery is slow.

instead, i'd like to share what we at mpi think as a two-prong approach in dealing with and addressing the brain waste. it's immigrant integration and policy due to admission. so in terms of immigrant integration, the examples of other countries, and again, i'm a person who always looks at it. what other people are doing to get the best ideas. the examples of canada and australia show that the importance of stakeholder approach. so companies, employers, can do a lot at their level by incorporating language training, for instance, in their inhouse communications skills training. states have huge, huge role in

making sure that brain waste and human capital are not wasted. i'm sorry, brain and human capital are not wasted. so states, for example, can partner up with other stakeholders and provide support for mentorship and internship programs, similar to what canadian and federal governments already do on a large scale. they can provide occupation specific and guidelines that are clear and up to date on how immigrants can have their foreign credentials and work experiences recognized. they can spur the development of effective bridge programs that serve both immigrants and employers. and the important still over benefits to other groups of workers. for example, those returning from the armed forces, women returning to work, or former

inmates. and at the national level, a lot can be done in terms of funding innovative and successful programs and information sharing. but we also talk about -- we also think about policies that can be done at the immigration -- immigrant admission. someone mentioned -- already mentioned provisional visas which will redefine who's hired, when they are hired, and what are the procedures that people have after getting experience, after both respective workers and employers test waters and the provisional visas will give rise to work, but also will give a person to sponsor themselves for permanent residence afterwards. and the last one, i know i'm running out of time, is our --

having to bring -- we absolutely need to bring flexibility into how immigrant level and numbers tied to the visas are set when the economy is changing like this and still in the gridlock over undocumented immigration and nothing is moving. so having the commission and independent commission on labor markets and immigration would allow us to bring flexibility and transparency and analysis, something along the lines that other countries already doing. all right. thank you. [applause] [applause] >> okay. fortunately, our next speakers comes from outside our borders. jennifer hunt at miguel

university. >> thank you very much. i'm going to returned to the topic of skilled immigrants and innovation, and i'll talk a little bit about entrepreneurship as well. i'm going to begin before telling you the results of my own research. how would we, in fact, expect skilled immigration to increase innovation. why do we care about innovation? it increases productivity growth which is the driver of economic growth. why would skilled immigrants help this? now one thing i want you to think about is the one way it might help is by making the population bigger. if ideas can be spread over as many people that you like, the more people that you have, the more ideas that you are likely to pop up and richer per capita the country will be.

the thing that we usually think about on the other hand is that immigrants, methemes, be more innovative than the native born. an alternative which is perhaps slightly less talked about, perhaps they are not more innovation, but better at some skill like entrepreneurship. why would skilled immigrants have these superior capacities? there are two options. one is that they had some natural ability that's actually better like some entrepreneurial spirit or talent. the other is, although they are not mutually exclusive, the immigrant is better educated or more specialized in the relevant field of study. how would these things in turn come about? one is what we call the self-selection. the sorts of people that want to come to the united states have these attributes, and again not mutually exclusive, the other possibility is that these with the people that the system

actually lets come to the united states. so is the analysis this simple? i want to bring up a couple of theoretical points here related to the important or otherwise of where skilled immigrants actually live. first i want to think about the amount of innovation done in the whole world. step back from the united states to think about the big picture. does it actually matter where the immigrants live or are we talking about reshuffling where the innovation occurs. well, immigrants might actually be more innovative. their innovative capacity might be increased by moving to the u.s. or even if they are innovative capacity is not, the capacity to commercialize the innovation maybe. of these conditions fulfilled? i can't site you a lot of academic studies showing that defensively. i think we think that probably both of these things are fulfilled. these conditions.

most probably by bringing somebody very able to the u.s. that they are going to actually be able to realize their potential better. i can't actually prove that to you. now let's actually think about a different issue. a lot of the discourse in the media and in politics seems to consider innovation to be some sort of sports competition where winning is what matters. if you come second, it's just a disaster. better your opponent is, the worse off that you are. let's take the example of intel. we mentioned earlier, what would the u.s. be like if intel wouldn't hungry? the discourse is intel and hungry is worse than the u.s. than no intel at all. obviously, that's wrong. even better outcome is intel in the u.s. if intel were in hungary, that would still be benefiting everybody in the u.s. a lot. let's remember that and ask the question, in fact, does it make any difference?

the answer actually is yes. there are academic studies that show that innovation done in the u.s. is more official than the innovation abroad. reminder, the innovation abroad is beneficial, but which is more. i think there's evidence that all of these talked about is true. bringing people to the u.s. improved their capacity for integration and commercialization. that's better than having the people do their work abroad. okay. let's just think about two other possibilities. so at the very beginning, i was talking about how the immigrants themselves might be extremely capable. their contribution to the u.s. might be even bigger than the individual productivity, if they improved the produce of the native born. i work better when my colleagues work better, and immigrants might produce the capacity of

the native born. on the other hand, immigrants might contribute less than you think than looking at their own productivity, because they are discouraging the native born from going into innovative fields. here i'm going to actually present you some evidence of which is true. okay. so i'm going to go on and talk about my own research, some of which is done with a student of princeton. there are two parts of this. one, we are focusing on the immigrants and the productivity. what are we looking at? i'm going to present results to you specifically of people commercializing, publicking frequently is another outcome we are looking at. it was slighted, and i'm also going to look at probability of sounding a company that grows very fast at beginning. that's going to -- that won't --

that part of the analysis does not take into account the positive spillovers immigrants might have on natives or the potential persuasive effects. the second part does. it's narrower in scope. it looks at the effect of skilled immigration on patenting per capita. it's going to include these spillover effects. okay? the data i'm going to use for the first part from something called the national survey of college graduates from 2003. then for the second part i'm going to use many decades of census data from the trademark and patent office. so here's the first set of results. these are from individuals and i'm going to start off by looking at wages even though that isn't directly related to what we are talking about. i'm starting off with wages because labor is usually think of the wage as capturing that individual's productivity. without any spillovers. but their overall productivity.

i'm going to focus on the first column. what the number tells you, the sample everybody has a college degree, the immigrants earn 2.9% more than natives. crudely speaking, they are 2.9% more productive. the next line, or the next questions refer to the proceeding five years. and the first question is whether you have licensed or commercialized a patent. not that common in natives. this number says amongst immigrants, it's .7% more than. more than double to commercialized or licensed a patent. the next measure that i look at is whether you've published a lot of papers. i usually cut off because of what the distribution looks like more than six.

.3% of natives, and 3.1 of immigrants. if you started a firm, by the last five years had more than 10 workers. these successful companies, .6% of natives, and .8% of immigrants. the gap is not as big. it's about 1/3 more likely for the immigrants. what i do in the second column, i try to look at what explain the superior performance. i do that by comparing similar natives in immigrants. by similar what i really mean is here i'm comparing immigrants and natives with the same level and the same field of study. when you do that, you find the compare the similar natives, they earn 8% less. that is a well known result that seems to be closely related to

how old you are when you arrive in the u.s. and language ability. what's very interesting, the results are different for the other more technology-related outcomes. you do, however, fully explain why the immigrants are better at patenting by comparing people, here the key thing is the field of study of the highest degree. the immigrants are concentrated in science and engineering, that's explains why they are double or twice as likely to patent. you get a zero here. higher publishing rates, you still get a little advantage of the immigrants when you compare similar immigrants and natives. but it's the one tenth of the size. the reason here, the double is likely to public because of higher education and more -- fields of study of higher degrees where people study more. starting firms, it doesn't make any dollar comparing -- make any

difference comparing immigrants and natives. this one is used for understanding what it is. namely higher education and the field of study of the highest degree that allows that superiority. okay. in the text -- i'm going to tell you briefly about the paper that you look at the impact of skilled immigration on per capita. this is from 1940 to 2000. what patented per capita looked like. there's a big increase starting in the '80s. this is what the share of immigrants as -- this is what imimmigrants as a share of workers, college degree holders, goes up to 3.5% by 2000. what i find that instead skilled immigration increases patn'ting per -- patenting per capita. in the '90s, it rose 36%. the share of immigrants amongst

the college popular grew from 2.2 to 3.5% in that time. and there's a range of results, depends exactly how you specify things. but that increase in immigrants increase in patents and per capita is 12 and 21%. immigrants are responsible for between 1/6 and 1/3 of that big increase in patenting per capita in the '90s. : more, start more companies than natives. and a raise patenting per capita if this is why just want to remind you that in this paper takes into account spillover effects. what i can do is to compare whether the impacts i find here is greater or less than you would expect from individual contribution of the immigrants. i find it's slightly more of which suggests that actually immigrants increasing the

productivity of the natives, rather than discouraging. of course, there may be a few who are discouraged and more who are encouraged but the net effect seems to be increase the performance of the natives. and then finally you can do a back of the envelope calculation. the impact of these immigrants arrived in the 1990s on innovation, the effect of innovation on turn of gdp per capita. and you can work out because of the inflow that there was a college immigrants in the 1990s to the u.s., a gdp per capita was between 1.4, 2.4% higher in the '90s than it would otherwise have been. thank you. [applause] >> thank you. our next speaker will be ron hira. an associate professor of public policy at rochester institute of technology.

>> i want to thank david and thank you for inviting me to present here, and i also want to thank the economic policy institute for helping to support some of this research. i'm going to talk about some policy issues come at the top of my talk is bridge to innovation. the visas are a source of both cheap and temporary labor as well as permanent immigration. so let me hit a key point here. first, h1b and l1 visas are temporary work visas. they are not the same thing as a green cards or legal permanent residents. we heard a bit about the green card discussion this morning, some terminology that some of you might know the become employment base, this different categories of green cards and getting green cards through

employment-based. having said that, h1b and l1 visas are temporary but they're also do intend. what that means is employers have the option of applying for legal permanent residents for those workers. those workers can't sell petition. of course, they can try to go to the diversity lottery or go through some other means but from an employment base means they generally do not have that ability. and in this paper what i wish is that some employers in fact using h1b and l1 visas as a bridge to permanent immigration as a bridge to the green card while others are using simply for labor mobility. this is part of what's happened over the last decade in terms of globalization and all short and i will tie those together. and this is important from a policy perspective because we often a lease in the public discussion conflate the two, then h1b is the same thing as green card come and our policy levers don't distinguish between the two come between a temperate work visa and legal permit

residents. the h1b and l1 visas also account for a lot of workers, about a million or so workers. we don't know how many at this is one of the problems in the discussion also is dhs, the government really isn't collecting data and it doesn't know exactly what's going on with these visa holders. i would also talk about some loopholes that make the visa attractive for cheaper labor. and also tie in out these loopholes are queuing offshore and. what you see top employers are offshore outsourcing. so let me go through very quickly some of the gaping loopholes that we have in the program. there's really for that i would identify as the most important. one big myth is that the labor market -- there is no labor market test for h1b or l1 visa to employers do not have to look for american workers before hiring h. one or innovate they can replace american workers with h1b and l1 visas and this just isn't a theoretical thing.

it's been reported in various press accounts that major companies like pfizer, wachovia when it was taking t.a.r.p. money, ibm and siemens have had enforced the american workers to train foreign born replacement. the upshot is there's no shortage necessary here. to bring in these workers. they could also legally pay market wages and we know there's a right at different ways, but the most obviously is a tax on employers of h1b workers have told the gao yes, we hire h1b sometimes because they will take a lower, less than market wages. and affected gao found that 54% are paid skill level one wages. these are super high wages. these are the 17% tiles for those particular occupations in those locations. i lot of them are being brought in and essentially entry-level wages.

another problem with the program, both programs is employers hold the visa and control for legal permanent residents opportunities. so as i said, the workers can't sell petition and because of the nature and we talked about this earlier today, about the small number of green cards that are their relative to the large number of h-1b and an uncapped l1, that creates a very imbalanced relationship and you've got a large number of people who are on the temporary work visas that are waiting a long green card queues. and they're stuck not like that employment even within that job. has been very little government oversight. the system integrity mostly depends on whistleblwhistleblowers come and that's not the best way to run things. particularly if a temporary worker is terminated and they have to leave the country right away. so it really discourages them from going through that. so let me get into some data

here are this is the top h-1b employers, and what i've done is added at the top employers for fy '07, fy08, fy09 date and the upshot is seven of the 10 top employers are actually have significant off shoring. this is kind of the who's who of the offshore industry. mosey base in india and this is. so for going to talk or the beneficiaries of the h-1b program, one has to say that the offshore outsourcing industry has been a huge beneficiary. seven of the top 10 employers beneficiaries of h-1b are off shoring firms. and that what i've done is looked at to what extent these serve as a conduit to permanent immigration. so to what extent do of h-1b's and l-1 serve as a bridge to immigration? i'm just going to show you one chart here in the interest of time. and what i've done is taken the

top 10 employers and i've reshuffled them a little bit based on what i call to immigration yield. what i've done is look at the green card applications that each of these employers have filed on behalf of other h-1b workers over the three-year period, and divided by the number of h-1b's. what i get is an immigration yield so just to clarify your, top consultants applied for zero green card but received 2368 h-1b's. that would be a 0% yield. whereas if you look at microsoft they apply for that 67% of the number of h-1b's pickup. this isn't a perfect measure but issuing indication of how these employers are using these programs in various different ways to have a had a more nuanced discussion i think about thinking about policy and policy levers and criteria that we use when we look at the impacts of these types of programs. if the goals are really to bring the best and brightest and keep them here they we need to look

at this kind of data, think about how we disaggregate some of the uses of the project is being used. you can save there is some clutching her at the top. companies that might surprise you like pfizer, very, very few green card applications were as they're getting quite a few h-1b's. ibm similarly. and part of what is going on there is they're getting pressure basically to adopt the outdoor business model. i will show you another to explain this. you have u.s. countries have essentially been pushed in the direction of adopting same model with an emphasis. so this chart here is from 2005, and the reason i pulled this out is this is kind of a tipping point for the i.t. services offshore outsourcing business where it really took off. and what this shows, and i would just point out, i've got four of

the top i.t. services companies, to to base in india, to based in the u.s., and i will focus on emphasis the top india one and dts what was the top u.s. want him to was bought out by hewlett-packard. what you see here is the pressure from wall street. market cap is the market cap position. this difficult -- total by of the company has priced out of its stock price and multiply by the outstanding number of shares if you want to take it private would have to come up with $20 million. if we want to take like eds private would cost about 12.5 billion. so why was it is as priced so much higher by the market even though it had much lower sales about a 20th of the sales? the reason is simple because their profit margins were much higher. the reason their profit margins were much higher is partly because they're doing the work offshore but also because they had changes by bringing it on site labor at lower costs on

h-1bs and l-1 visas. government policy tilted the field in favor of that kind of business model. and to give you some sense of companies like infosys doesn't have many americans that they have a very small share. here i pull out a quote from cis, the officer of wipro. how to use the h-1b program. they bring about 1000 temporary workers to the u.s. each year while 1000 rotate back to india to serve clients. so what does it serves as the training ground where you bring in workers to learn the jobs and then move them overseas. these policies also disadvantaged countries are hiring american workers were trying to hire american workers. this quote is from an interesting guide here who's the ceo of systems in motion which is a u.s. world source-based company trying to hire

america's. but he's kind of interesting because he's asked a former executive at one of the offshore outsourcing companies, and his quote is the widespread use of current work visa laws be be one, h-1b our l-1 programs that allow countries to bring in cheap labor from other countries to replace an american labor pool is extremely damaging to our business because it creates artificial pressure on prices and consequently wages of an equally qualified local workforce. so you've got someone who knows the system inside and out because he's been an executive in one of those companies, and how it's harming now his business as he tried to hire american workers. and you do this also from trade groups like the national association of computer consulting businesses, now known as tex or allies when they testified before congress about the l-1 and the opportunities there. in the case of the l-1 visa there's no way to lewis with his huge wage arbitrage would they testified the fact their clients

or their companies were being undercut by 30 or 40% in terms of their billing rates. so let me conclude with some discussion on policy reform, and i'm sure we'll talk about this in a lot more detail during the q&a. but it seems to me that it's pretty clear that current system is harming american workers, students and companies as well as foreign workers as they become tethered to not just an employer, but to a specific job waiting for six, eight or 10 years for their permanent residence. and i think it's right for income at u.s. s.t.e.m. workers to question these kind of government policies, whether they're being undercut or not. and that's important for a few reasons, not because it hurts them. you can say helps the public welfare and maybe at their expense, but if s.t.e.m. really does matter and you think that you want to encourage fewest domestic supply into s.t.e.m. these are the best ambassadors

to the next generation, it's the income of workers who will go out of work with young people to say these are great careers, great professions, you should come into. so in terms of my recommendations, i would say we should close these loopholes which i don't think should be controversial. one is we should intimate effective labor market test. you should look for american workers. there should be some need there. those foreign workers should be paid market wages at least. and you should increase the portability pieces and have a clear and rapid path to permit residents. and that we should have conduct regular audits of these programs. we need a lot more sunshine of these programs, particularly the l-1 visas. we are very little data and very little information on what's going on, particularly in terms of wages. you can hire a typical i.t. worker or engineer in india for $7000 a year. so you can imagine that kind of wage arbitrage we have no wage floor at all. so we don't know what's going on there.

secretary of labor ray marshall has recommended foreign worker adjustment commission. i know migration policy institute has worked on these things. and i believe it was the last one and just say that i don't think that trade policy should circumvent integration policy. one aspect that hasn't been discussed enough is the intersection of trade and immigration policy. trade agreements are increasingly having these kinds of immigration type of provisions in them as low-cost countries what to see -- want to see a barrier to trade, that their advantage as low-cost high skilled workers, and a barrier to trade is moving their workers into a high-cost countries. thank you. [applause] >> all right. and our final speaker is the person is most responsible for bringing this entire session

together, and that is david hart from george mason university. >> thank you, kevin. and thank you all for staying. it's been a long morning, and i know we have some discussion to go, and i look forward to go to that. so my work is on a relatively small but important slice of the subject, i want to acknowledge my co-author who is here. i put his name in parentheses only because he shouldn't be associate with anything it might say in the qa, especially he can speak for himself i'm sure if he disagrees with me on any of the points. this work builds on dollars of prior work, and we are focusing on a particular important population of firms. these are firms that have doubled in size in a four year period. and his early works such as these terms are responsible basically for all of the economic growth in the economy. and employment growth as well.

they are are an interesting group of firms. they need to be studied more. they are not all startups but most of them are pretty yelling. and they are not all in the high-tech sector. they are very broadly across sectors. but there some reason to think of high-tech firms are more important than other firms. so in our study we focus particularly on these high impact, high tech firms which the idea that perhaps this is a point of leverage for accelerating economic growth. i should reference this paper that trade to mention the beginning of the talk. we talk. we have a policy briefing that we are releasing today from brookings and that's related to broader peer reviewed work in academic literature. so i will do to the and you may want to look up some of the more fine details in that paper, or any published work. okay, so we did a survey of these companies, and they were about 25,000 firms in our population. these are the high-tech firms that have doubled in the for your very from 2002-2006.

we basically called him up and asked them a series of questions, and we had about 1300 responses. the reason we kept it short is that's the way you get a reasonably high survey response rate. of course, the disadvantages we only know a little bit about these countries. there's a lot more detailed questions we would like to know but we don't know the answers. we did follow-up interviews with a small group and that shed some quality of light on it but it's difficult to draw final conclusions from that small set of case studies. but they are contradictory. our basic fun is that about a six of these firms had at least one foreign-born founder. and i was cackling from jeanne is never come if we extrapolate outcome with other studies in this field, borders on the high end or low in. this difference -- different ways of defining the population. but my you and i think zoltan

did you come if you look at it is a sizable share of these coveted many of the cubbies are found by more than one person so when we look at the population of founders rather than the population of copies, the number goes down about 13% of the founders of these companies were foreign-born. and then so you notice i'm shifting back and forth between language foreign-born an immigrant, and i want to clarify that. so someone in the u.s. law, can't commend to the getty drinker. i think it's justified use that term here is that most of the founders have been a longtime. most of them are naturalized citizens. many of them are highly educated, and these characteristics are not surprising because we are only looking at companies where they been successful. they have doubled inside any four-year period, and, in fact, in our case studies we found a surprising proportion that they have founded previous country.

-- previously companies. so this is a kind of profile of the founders. i think the thing that strikes people most when you look at our paper, the thing i've got mostly back on is what these people come from. they come from all over the place. in the back of the paper you can find a table of 55 different countries that are represented in this population. here's a little bit of detail on education. we know these foreign-born founders, here are the foreign born founders are immigrant founders. the light bar are the nativeborn. they are far more likely to have a higher education, have a graduate education. and i think that's because as jeanne said, it's a gateway for highly skilled people to come to the u.s. and also there are opportunities for people to start high-tech firms before they get to graduate schools. so bill gates and paul allen being very famous examples, college dropout who started

microsoft. now, the real difficult question here is are these folks complementary to nativeborn or is there some kind of crowding out? unfortunately, and i think all of us in the field feel this is unfortunate, there's no definitive answer to this question. to the founders make the firms are in a sense does the environment make the firm? we get a little bit of leverage on that by comparing those firms that have at least one foreign-born founder with those that were native founded. what we find is that they are very similar, and less we take out -- this is if we control for education. if we take education out, the foreign-born firms perform better. of firms founded by foreign-born founders are far better. this is a question of interpretation, again to what extent is a success due to their individual characteristic, again

as jeanne alluded to, or does it have to do with the environment in which these terms are being founded. and the nativeborn person had the same education would have found a similar kind of firm. one difference that we give it is a we asked the question, does your firm have a strategic relationship with a firm in a foreign country? and we give it a difference between the firms that have at least one foreign-born founder and those who only found by nativeborn. again, question of interpretation, is this a vehicle for outsourcing jobs that otherwise would've state in the united states, or you is this a business strategy that is essential to the firm's survival? a question, i don't think we have a definitive answer to but is it's interesting to think about. another finding that i'm not going to talk about a lot but that struck us as we look at the data was at the foreign-born founders were more likely to team up with people who might be considered outsiders in u.s. complex. that is u.s. minorities and

women. compared to their white nativeborn counterparts. so that's an interesting funny. there's not a lot of these firms i think you have to be very, very careful in doing much with that it, but it's an interesting proposition for future research. so the bottom line, this is going to more detail in the paper, i don't think we can rule out the crowding out hypothesis. if you put that finding and what do you what do you fight in conjunction with the work of jeanne and others, our inclination is to view the these foreign-born than as confident he to the nativeborn founders. but i would actually admit that there is some interpretation and extrapolation required to get to the policy implications. okay, so let me turn now in the last piece of the talk to the policy issues. the first thing i want to say is we need to embed this in a broader set of things in that we're talking about long-term policy, that a kind of help from the recession that is going on right now.

and the idea is that maybe we can expand that big population of high impact firms, and that that might help the economy. can we do that? i don't know. i think the administration is starting to engage an experiment that would try to answer that question. and i hope that they will move that forward. .. if there's not demand for the products of the companies and high impact companies than expanding the number of people who might found them is not going to be two more companies. but in conjunction of theals wil broader policy that deals withmr all aspects of the environment t to the high-tech companies who

c have these characteristics is posi sick positive contribution andno that is something we're going to discuss in the panel. ientify the new ideas as it got into the immigration field as we come to this from new ideas in the immigration policy as far as i can tell. every idea has been thought of, debated, recycled. people said it's paralyzed, it's been paralyzed a long time. my not so new ideas, there are three of them. my first one and the one that has the most leverage s to just try to deal with the backlog of those who are here already waiting for their green cards. there is a paper that suggests about half a million people not counting families, but half a million people just waiting in many line for their green card and doing, you know, various things that it takes to extend their stay in the u.s. most of these people are from a small number of countries, india and china.

some of the categories were alluded to earlier. eb-2, that is employment-based second category includes professionals with advanced degrees, so if you're from india and you have an advanced degree, the immigration system is basically processing people from the middle of 2006. so about a five-year, four and a half year backlog for that. eb-3 professionals with bachelor's degrees or skilled workers, so that's a much broader group. there if you're from india and you applied for a green card in february of '02, you're now at the top level of the priority list. so we're talking six, eight, ten years for many people. this is just accommodating these people, they're here, they're working, let's free them up from being tied to their employer. so that's idea number one. second idea, i think, again, some of the previous speakers have mentioned something like this is to try to address the immigration pathway for students. students have to figure out how to get employed. there is a pathway for them to

get employed through so-called opt, optional practical training, so it's possible for students to stay and look for a job. but when that period expires, they have to have an employer who's ready to sponsor them, and that may be difficult. and then, obviously, they have to get through the green card process like everybody else. so, so i'm in favor of trying to link these statuses together, but i think it's important to build in the employment piece as well as the student piece as opposed to those who would say we should staple the green card to the diploma as a representative of higher education, i can tell you there's a lot of creativity in higher education, and there would be universities that would recruit on the basis of attractiveness to the green card as opposed to other kinds of things that you might want to recruit students for. so i think there's some need to temper that idea with an employment element. and then the third one, and this one i think is much more difficult to implement, but it hasn't been mentioned today, so i'm glad i have it on my list.

it's the idea of employing a point system. the immigration system would pick people on educational qualifications, language qualifications and so on, and this is in place in a number of countries, australia and canada most prominently, and it was contemplated in the 2010 bill. -- 2007 bill. for picking high-impact entrepreneurs, i think that's a much more difficult problem. we're talking about a tiny fraction of the population, and it's difficult to observe those qualities like risk taking, like some kind of outlook on seeking opportunities that you might want to identify these people. so i think that's difficult to do, but it would be worth talking about and thinking about it. so to wrap up, my time is over. i don't want to exaggerate the importance of high-tech entrepreneurs. it's a very small slice of this population, but i think it is a consideration that would be worth thinking about as we debate this broader question of competitiveness, innovation and high-skill immigration. and, again, thanks for coming.

i'm looking forward to the discussion. [applause] >> excuse me, i'm going to ask a couple of questions. i need to focus the discussion a little bit. one of the things i realized in listening to the presentation is that we're confronting layers upon layers of questions. i mean, for 25 years i've been worrying about the fundamental question about how can we even provid