Immigration Policy and Equity Returns: Evidence from the H-1B Visa Program

60 Pages Posted: 30 Jul 2018 Last revised: 13 Nov 2018

Date Written: October 5, 2018


I show that firms' access to skilled immigrant labor is an important determinant of the cross-section of equity returns. Using a comprehensive set of data on H-1B visa petitions, I construct an occupation-level measure of labor market competition between skilled immigrant and local workers. I find that stocks of firms in high-competition industries -- those with a high share of labor for which skilled immigrants are close substitutes -- outperform their peers with a low share by 8.8% annually. I show that this premium is explained by firms' differential exposures to priced immigration policy shocks that shift the supply of skilled immigrant labor. Based on evidence from the 2003 H-1B legislative cap reduction as a natural experiment, I show that these shocks differentially impact wages at the occupation-level, leading to an asymmetric effect on firms' cash flows through labor expenditure.

Keywords: Cross-Sectional Equity Pricing, Immigration, Human Capital, Wages, Financial Markets and the Macroeconomy

JEL Classification: G12, G18, G38, J4, J6

Suggested Citation

Sharifkhani, Ali, Immigration Policy and Equity Returns: Evidence from the H-1B Visa Program (October 5, 2018). 31st Australasian Finance and Banking Conference 2018, Available at SSRN: or

Ali Sharifkhani (Contact Author)

Northeastern University ( email )

360 Huntington Ave.
Boston, MA 02115
United States

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