Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations

Mo Shen and David Denis

The Review of Financial Studies, 2021, vol. 34, issue 10, 4663-4700

Abstract: This paper studies how the labor market frictions of skilled workers affect corporate valuation. The analysis features immigrant workers’ mobility constraints imposed by the U.S. green card application process and exploits exogenous variations caused by imperfections in the current immigration system. The study finds that relaxing mobility constraints negatively influences firm value. This effect is stronger for firms with higher labor adjustment costs. Reductions in investments and increases in labor costs are channels through which labor mobility adversely affects firm value. The findings suggest that monopoly rent over skilled workers is an important economic determinant of corporate valuation.

JEL-codes: G30 G32 G38 J24 J61 J68 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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