High-Skill Immigration, Offshore R&D, and Firm Dynamics

Jingting Fan, Eunhee Lee and Valerie Smeets

No 16870, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study firms’ decision to use foreign R&D inputs—immigrant researchers and imported R&D services—and the implications of this use for firm performance and aggregate productivity. Using Danish data, we document that firms with immigrant researchers are more likely to source foreign R&D services and that using either foreign input increases R&D efficiency and firm performance. We develop and estimate a model of firm dynamics that rationalizes these patterns. Counterfactual experiments show that the two foreign inputs play crucial yet complementary roles in R&D. Without access to these inputs, R&D participation and the aggregate return to R&D both would decrease substantially.

Keywords: R&d sourcing; R&d offshoring; High-skill immigration; Immigrant researchers; Firm productivity (search for similar items in EconPapers)
JEL-codes: D24 F14 F22 O32 (search for similar items in EconPapers)
Date: 2022-01
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