High-Skill Migration, Multinational Companies and the Location of Economic Activity

Abstract

This paper aims to understand the relationship between high-skill immigration and multinational activity. I assemble a novel firm-level dataset on high-skill visas and show that there is a large home bias effect: foreign multinationals hire more immigrants from their home countries than from other origins. I then build and estimate a quantitative model that relates multinational production with immigration. First, I impose a restrictive immigration policy in the US and evaluate how it affects production and wages. Second, I increase the barriers to multinational production and show that immigration is an important channel to quantify the welfare gains generated by multinationals.

Keywords: High-Skill Immigration, H-1B Visas, Multinational Companies, IT Sector

JEL Classification: F16, F22, F23, J61