The Other Side Of Immigration
Ninja Economics posts on her blog about immigration and its impact on the US economy:

The debate on immigration reform is characterized by a bipartisan Senate proposal, the President's support for a "path to citizenship" and the House Republican opposition to it. Much of the current conversation focuses on the economic impacts, with some of the biggest names in the tech industry giving their thoughts, but most of the benefits rely on successful social integration and networking by new immigrants.

The economic literature suggests that immigrants raise the overall standard of living of American workers by boosting wages and lowering prices. An influx of cheap labor can make certain businesses (like farming) feasible and a larger domestic population through immigration creates more potential customers.

...The most important factor driving economic growth is innovation. Immigrants secure patents at double the native rate, and more than half of startups in Silicon Valley were founded by foreign-born entrepreneurs, according to entrepreneur and academic Vivek Wadhwa and the Kauffman Foundation. "These data imply that a one percentage point rise in the share of immigrant college graduates in the population increases patents per capita by 6%," based on the work done by Jennifer Hunt and Marjolaine Gauthier-Loiselle in this NBER paper.

Low-skilled and less-educated immigrant workers can also make the American economy more efficient. Low-skilled immigrant workers are more willing to move to find work than native-born American workers, alleviating some geographic-dependent labor segmentation problems. And, outside of Silicon Valley, immigrants open businesses that serve populations outside their own ethnic communities (e.g. Vietnamese-owned nail salons in New York City or Chinese restaurants in every major city).

She links to a Paul Graham essay on immigration and tech brilliance:

Let the Other 95% of Great Programmers In

American technology companies want the government to make immigration easier because they say they can't find enough programmers in the US. Anti-immigration people say that instead of letting foreigners take these jobs, we should train more Americans to be programmers. Who's right?

The technology companies are right. What the anti-immigration people don't understand is that there is a huge variation in ability between competent programmers and exceptional ones, and while you can train people to be competent, you can't train them to be exceptional. Exceptional programmers have an aptitude for and interest in programming that is not merely the product of training. [1]

The US has less than 5% of the world's population. Which means if the qualities that make someone a great programmer are evenly distributed, 95% of great programmers are born outside the US.

The notes from Graham's piece are also worth reading:

Notes

[1] How much better is a great programmer than an ordinary one? So much better that you can't even measure the difference directly. A great programmer doesn't merely do the same work faster. A great programmer will invent things an ordinary programmer would never even think of. This doesn't mean a great programmer is infinitely more valuable, because any invention has a finite market value. But it's easy to imagine cases where a great programmer might invent things worth 100x or even 1000x an average programmer's salary.

[2] There are a handful of consulting firms that rent out big pools of foreign programmers they bring in on H1-B visas. By all means crack down on these. It should be easy to write legislation that distinguishes them, because they are so different from technology companies. But it is dishonest of the anti-immigration people to claim that companies like Google and Facebook are driven by the same motives. An influx of inexpensive but mediocre programmers is the last thing they'd want; it would destroy them.

[3] Though this essay talks about programmers, the group of people we need to import is broader, ranging from designers to programmers to electrical engineers. The best one could do as a general term might be "digital talent." It seemed better to make the argument a little too narrow than to confuse everyone with a neologism.

Matt Mullenweg thinks Graham is wrong:

In a region that prides itself on disruption and working from first principles, San Francisco's scaling problem is pretty humorous if you look at it from the outside: otherwise smart and inventive founders continue to set up offices and try to hire or move people in the most overheated environment since there were carphones in Cadillac Allantes. This is where I feel like Paul Graham misses the most obvious solution to the problem.

If 95% of great programmers aren't in the US, and an even higher percentage not in the Bay Area, set up your company to take advantage of that fact as a strength, not a weakness. Use WordPress and P2, use Slack, use G+ Hangouts, use Skype, use any of the amazing technology that allows us to collaborate as effectively online as previous generations of company did offline. Let people live someplace remarkable instead of paying $2,800 a month for a mediocre one bedroom rental in San Francisco. Or don't, and let companies like Automattic and Github hire the best and brightest and let them live and work wherever they like.

Here's how a modern work life can work:

I saw my wonderful previous assistant twice -- once when he came down from San Francisco to meet me and once when he came down for a 50th birthday party Gregg threw for me. I've met my wonderful current assistant once.

We work over Skype. This means no getting dressed, getting in the car, sitting in frustrating traffic, and none of the time that it takes to do that and then sit in traffic to go home. It also means that my house can be my house -- basically a giant walk-in file cabinet and series of book shelves and book piles, with a couch, a refrigerator, and plumbing.