Skilled Labor Supply and Corporate Investment: Evidence from the H-1B Visa Program

52 Pages Posted: 1 Dec 2016 Last revised: 10 Jun 2018

See all articles by Sheng-Jun Xu

Sheng-Jun Xu

University of Alberta - School of Business

Date Written: June 1, 2018

Abstract

I study how a firm's ability to hire skilled workers affects corporate investment. To this end, I exploit a 2003 policy change that restricted the ability of U.S. firms to employ foreign skilled workers via the H-1B visa program. I find that the reduction in the cap caused a significant decrease in the investment rate of firms that were ex-ante more reliant on H-1B workers as a source of skilled labor. The effect is more pronounced for firms employing workers in occupations that are more complementary to physical capital, as well as for firms that are more constrained in their access to substitute sources of skilled labor. My findings show that constraints on access to human capital, much like constraints on access to financial capital, can hinder corporate investment.

Keywords: Investment, Skilled Labor, Capital-Skill Complementarity, Immigration, Hiring Constraints, Labor Market Frictions

JEL Classification: G31, J24

Suggested Citation

Xu, Sheng-Jun, Skilled Labor Supply and Corporate Investment: Evidence from the H-1B Visa Program (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 )

2-43 Business Building
Edmonton, Alberta T6G 2C7
Canada

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