Immigration and Business Dynamics: Evidence from U.S. Firms

Parag Mahajan

Journal of the European Economic Association, 2024, vol. 22, issue 6, 2827-2869

Abstract: This paper studies the impact of immigration on U.S. local business dynamics using a comprehensive collection of survey and administrative data. It finds heterogeneous impacts across the employer productivity distribution that favor higher-productivity firms and lead to increases in average local earnings. Responses to immigration along the exit margin are particularly important. Immigrant inflows cull establishments from low-productivity firms while preserving establishments from high-productivity firms. Overall, reduced exit accounts for 43% of immigrant-induced job creation and 41% of immigrant-induced earnings growth. A general equilibrium model proposes a mechanism that ties immigrant workers to high-productivity employers and shows how accounting for changes to the employer productivity distribution can yield substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand.

Date: 2024
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Working Paper: Immigration and Business Dynamics: Evidence from U.S. Firms (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:22:y:2024:i:6:p:2827-2869.

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