Firm Dynamics and Immigration: The Case of High-Skilled Immigration

40 Pages Posted: 8 May 2017

See all articles by Michael E. Waugh

Michael E. Waugh

New York University (NYU), Leonard N. Stern School of Business, Department of Economics

Date Written: May 2017

Abstract

This paper shows how the dynamics of the firm yield new insights into the short- and long-run economic outcomes from changes in immigration policy. I quantitatively illustrate these insights by evaluating two policies: an expansion of and the elimination of the H-1B visa program for skilled labor. A change in policy changes firms’ entry and exit decisions as they dynamically respond to changes in market size. The dynamic response of firms amplifies changes in relative wages as labor demand shifts with the distribution of firms. Firms’ responses also lead to the rapid accrual of aggregate gains/losses in output and consumption. The welfare implications of policy changes depend critically on who bears the burden of creating new firms.

Suggested Citation

Waugh, Michael E., Firm Dynamics and Immigration: The Case of High-Skilled Immigration (May 2017). NBER Working Paper No. w23387. Available at SSRN: https://ssrn.com/abstract=2964683

Michael E. Waugh (Contact Author)

New York University (NYU), Leonard N. Stern School of Business, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

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