Labor substitutability and corporate labor investment: Evidence from the H-1B program

Xinhui Huang and Augustine Tarkom

Finance Research Letters, 2023, vol. 53, issue C

Abstract: The H-1B program which allows skilled foreign-born individuals to work temporarily in the United States is imperative for corporate employment, yet there is no empirical evidence on how it relates to labor investment efficiency. We examine this relationship and find that an increase in the chance of an H-1B lottery approval is positively associated with an increase in labor investment efficiency. We also provide evidence that the growth in the domestic labor wage dampens the positive effect of the H-1B program on labor investment efficiency. Our study is robust to alternative measures, and estimation techniques, and helps sheds light on the relevance of the H-1B program on corporate hiring decisions.

Keywords: Labor investment efficiency; H-1B lottery; High skilled labor; Wage growth (search for similar items in EconPapers)
JEL-codes: F22 G31 J61 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000235

DOI: 10.1016/j.frl.2023.103649

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