Do Foreign Experts Increase the Productivity of Domestic Firms?
44 Pages Posted: 9 Oct 2011
While most countries welcome (and some even subsidise) high-skilled immigrants, there is very limited evidence of their importance for domestic firms. To guide our empirical analysis, we first set up a simple theoretical model to show how foreign experts may impact on the productivity and wages of domestic firms. Using matched worker-firm data from Denmark and a difference-indifferences matching approach, we then find that firms that hire foreign experts – defined as employees eligible for reduced taxation under the Danish "Tax scheme for foreign researchers and key employees" – both become more productive (pay higher wages) and increase their exports of goods and services.
Keywords: foreign experts, export, immigrants, productivity, difference-in-differences matching
JEL Classification: F22, J24, J31, J61, L2
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