The role of high-skilled foreign labor in startup performance: Evidence from two natural experiments

Jun Chen, Shenje Hshieh and Feng Zhang

Journal of Financial Economics, 2021, vol. 142, issue 1, 430-452

Abstract: We examine the role of high-skilled foreign labor in VC-backed startups through two natural experiments. First, we show that winning more H-1B visas in random lotteries enhances VC-backed startups’ financial performance, likelihood of going public, and quantity and quality of innovation. Second, we show that the H-1B quota reduction in 2004 caused permanent damage to the performance of startups that previously had used H-1B workers. The findings imply that high-skilled foreign workers possess skills or talents that are difficult to replace and that barriers to securing H-1B visas lower startups’ innovation and financial performance.

Keywords: High-skilled foreign labor; H-1B visa; VC-backed companies; Innovation; Initial public offerings (IPOs) (search for similar items in EconPapers)
JEL-codes: G24 G28 G32 G34 G38 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:142:y:2021:i:1:p:430-452

DOI: 10.1016/j.jfineco.2021.05.042

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