Skilled Labor Rationing and Corporate Investment: Evidence from H-1B Visa Application Deadlines
47 Pages Posted: 7 Jul 2020 Last revised: 11 Jan 2021
Date Written: June 10, 2020
I study how restrictions on hiring foreign skilled workers affect corporate investment. I exploit a temporal discontinuity in firms' ability to apply for temporary work visas ("H-1B visas") for prospective employees, and find that ex-post rationing of H-1B visas leads to lower capital expenditures, especially for firms in industries more dependent on H-1B workers for skilled labor, for years during which rationing leads to longer hiring delays, and for firms with greater financial slack. Using the historical geographic distribution of immigrants to identify exposure to immigrant supply shocks, I further find that ex-ante uncertainty over the ability to hire visa workers induces firms to delay investment. Specifically, I find that exposed firms tend to delay investment until uncertainty over H-1B hiring is resolved each year.
Keywords: corporate investment, skilled labor, immigration, capital-skill complementarity, hiring uncertainty, H-1B visas
JEL Classification: G31, E22, J24, J61
Suggested Citation: Suggested Citation