Skilled Immigration, R&D Concentration, and Industry Consolidation

Rajesh K Aggarwal and Mufaddal Baxamusa

The Review of Corporate Finance Studies, 2024, vol. 13, issue 4, 966-998

Abstract: We demonstrate a novel link between skilled immigration restrictions, corporate innovation, and industry consolidation. Binding restrictions on H1B visas are a shock to firms’ R&D labor supply, leading firms to shift R&D expenditures and employees overseas. Organizationally and financially constrained firms are less able to adjust to the restrictions. They reduce basic research and patenting, are less able to acquire other firms for intellectual property, and are more likely to exit. Industry concentration and firm-level markups increase when firms are better able to adjust. This increase in market power is an unintended consequence of skilled immigration restrictions.

JEL-codes: G31 G34 G38 (search for similar items in EconPapers)
Date: 2024
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