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

See all articles by Sheng-Jun Xu

Sheng-Jun Xu

University of Alberta - School of Business

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

Xu, Sheng-Jun, Skilled Foreign Labor Supply and Corporate Investment: Evidence from H-1B Lotteries and Application Deadlines (June 1, 2018). Available at SSRN: https://ssrn.com/abstract=2877241 or http://dx.doi.org/10.2139/ssrn.2877241

Sheng-Jun Xu (Contact Author)

University of Alberta - School of Business ( email )

2-32D Business Building
Edmonton, Alberta T6G 2R6
Canada

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