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 that achieve a higher lottery success rate increase their post-lottery investments. Second, we exploit the uncertain timing of the H-1B application deadline during non-lottery years and show that firms reduce their investments when their visa applications are unexpectedly ineligible due to labor certification processing times. Cross-sectional heterogeneity analysis provides suggestive evidence that access to cheap foreign labor partly explains the complementarity between 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 )

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Edmonton, Alberta T6G 2R6
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