The Role of High-Skilled Foreign Labor in Startup Performance: Evidence from Two Natural Experiments
65 Pages Posted: 6 Oct 2019
Date Written: May 25, 2019
We examine the role of high-skilled foreign labor in VC-backed startups. Employing two natural experiments, one based on the drastic reduction in the annual quota of H-1B visa in 2004 and the other based on lotteries the USCIS uses to randomly allocate H-1B visas, we find that high-skilled foreign labor enhances VC-backed startups’ financial performance and the quantity and quality of their innovation. The high-skilled foreign labor effects are long-lasting and greater in the long run. The study contributes to the literature by highlighting high-skilled foreign labor as an important determinant of the performance of VC-backed startups.
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