The Impact of Skilled Foreign Workers on Firms: an Investigation of Publicly Traded U.S. Firms

Anirban Ghosh (), Anna Maria Mayda and Francesc Ortega
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Anirban Ghosh: Georgetown University

No 1442, RFBerlin Discussion Paper Series from Rockwool Foundation Berlin (RF Berlin)

Abstract: Many U.S. businessmen are vocally in favor of an increase in the number of H-1B visas. Is there systematic evidence that this would positively affect firms' productivity, sales, employment or profits? To address these questions we assemble a unique dataset that matches all labor condition applications (LCAs) - the first step towards H-1B visas for skilled foreign-born workers in the U.S. - with firm-level data on publicly traded U.S. firms (from Compustat). Our identification is based on the sharp reduction in the annual H-1B cap that took place in 2004, combined with information on the degree of dependency on H-1B visas at the firm level as in Kerr and Lincoln (2010). The main result of this paper is that if the cap on H-1B visas were relaxed, a subset of firms would experience gains in average labor productivity, firm size, and profits. These are firms that conduct R&D and are heavy users of H-1B workers - they belong to the top quintile among filers of LCAs. These empirical findings are consistent with a heterogeneous- firms model where innovation enhances productivity and is subject to fixed costs.

Date: 2014-11
New Economics Papers: this item is included in nep-bec, nep-sbm and nep-tid
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Citations: View citations in EconPapers (17)

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Working Paper: The Impact of Skilled Foreign Workers on Firms: An Investigation of Publicly Traded U.S. Firms (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:1442

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