Skilled Foreign Labor Supply and Corporate Investment: Evidence from H-1B Lotteries and Application Deadlines
50 Pages Posted: 1 Dec 2016 Last revised: 6 Feb 2024
Date Written: June 1, 2018
Abstract
We study the effect of skilled foreign labor on corporate investment using two natural experiments involving the H-1B visa program. First, we exploit the randomized lottery for allocating H-1B visas and show that firms receiving a higher share of their visa applications increase their subsequent investments. Second, we exploit the uncertain timing of the H-1B application deadline in years when the lottery was not held, and show that firms reduce their investments when their visa applications are unexpectedly ineligible due to processing time for prerequisite labor certifications. Cross-sectional heterogeneity analysis provides suggestive evidence that access to cheap foreign labor partly explains the complementarity between H-1B visa supply and investment.
Keywords: investment, skilled labor, immigration, capital-skill complementarity, H-1B visas
JEL Classification: G31, E22, J24, J61
Suggested Citation: Suggested Citation