Skilled immigration frictions as a barrier for young firms

Federico Mandelman, Mishita Mehra and Hewei Shen

Journal of Monetary Economics, 2025, vol. 155, issue C

Abstract: This paper examines the impact of immigration policy frictions on technology-intensive firms by age cohort. The firm-level empirical evidence shows that H-1B policy restrictions on skilled immigrants directly affect the survival of young firms in technology-intensive sectors. We develop a novel general equilibrium model with firm entry and exit that mimics the policy frictions in the H-1B program. The model matches the age distribution of firms in high-technology sectors and shows that immigration policy reforms that increase the entry of younger firms induce greater exit of older, less productive firms, thereby increasing efficiency.

Keywords: Skilled immigration; Start-ups; High-technology firms; Firm dynamics (search for similar items in EconPapers)
JEL-codes: F22 M13 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:155:y:2025:i:c:s0304393225000820

DOI: 10.1016/j.jmoneco.2025.103811

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