The Impact of Skilled Foreign Workers on Firms: An Investigation of Publicly Traded U.S. Firms

Anirban Ghosh (), Anna Maria Mayda and Francesc Ortega
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Anirban Ghosh: Georgetown University

No 8684, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Many U.S. businessmen are vocally in favor of an increase in the number of H-1B visas. Is there systematic evidence that this would positively affect firms' productivity, sales, employment or profits? To address these questions we assemble a unique dataset that matches all labor condition applications (LCAs) – the first step towards H-1B visas for skilled foreign-born workers in the U.S. – with firm-level data on publicly traded U.S. firms (from Compustat). Our identification is based on the sharp reduction in the annual H-1B cap that took place in 2004, combined with information on the degree of dependency on H-1B visas at the firm level as in Kerr and Lincoln (2010). The main result of this paper is that if the cap on H-1B visas were relaxed, a subset of firms would experience gains in average labor productivity, firm size, and profits. These are firms that conduct R&D and are heavy users of H-1B workers – they belong to the top quintile among filers of LCAs. These empirical findings are consistent with a heterogeneous-firms model where innovation enhances productivity and is subject to fixed costs.

Keywords: immigration; skills; productivity; visas; R&D (search for similar items in EconPapers)
JEL-codes: F22 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2014-11
New Economics Papers: this item is included in nep-ino, nep-mig and nep-sbm
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Citations: View citations in EconPapers (35)

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Working Paper: The Impact of Skilled Foreign Workers on Firms: an Investigation of Publicly Traded U.S. Firms (2014)
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