The Role of High-Skilled Foreign Labor in Startup Performance: Evidence from Two Natural Experiments

65 Pages Posted: 6 Oct 2019

See all articles by Jun Chen

Jun Chen

Renmin University of China

Shenje Hshieh

City University of Hong Kong

Feng Zhang

University of Utah - Department of Finance

Date Written: May 25, 2019

Abstract

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.

Suggested Citation

Chen, Jun and Hshieh, Shenje and Zhang, Feng, The Role of High-Skilled Foreign Labor in Startup Performance: Evidence from Two Natural Experiments (May 25, 2019). Available at SSRN: https://ssrn.com/abstract=3459001 or http://dx.doi.org/10.2139/ssrn.3459001

Jun Chen

Renmin University of China ( email )

Beijing
China

Shenje Hshieh

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Feng Zhang (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112-9303
United States

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