The Effects of Skilled Immigration Restrictions on Corporate Investment: Evidence from H-1B Visa Application Deadlines

42 Pages Posted: 7 Jul 2020

See all articles by Sheng-Jun Xu

Sheng-Jun Xu

University of Alberta - School of Business

Date Written: June 10, 2020

Abstract

I study how access to foreign skilled workers affects corporate investment. Restrictions on high-skilled immigration may induce firms to lower investment due to complementarity between skill and capital, and also to delay investment due to ex-ante uncertainty over the ability to hire. I exploit a temporal discontinuity in firms' ability to apply for temporary work visas ("H-1B visas") for prospective employees, and find that rationing of H-1B visas leads to lower investment in tangible capital. Using the historical distribution of immigrants throughout the United States to identify exposure to immigrant supply shocks, I further find that firms tend to periodically delay investment until annual uncertainty over H-1B hiring is resolved. Specifically, I find that firms located in more exposed regions periodically increase investment after the H-1B application deadline every year, but only in industries that are more dependent on H-1B workers.

Keywords: corporate investment, skilled labor, immigration, capital-skill complementarity, hiring uncertainty, H-1B visas

JEL Classification: G31, E22, J24, J61

Suggested Citation

Xu, Sheng-Jun, The Effects of Skilled Immigration Restrictions on Corporate Investment: Evidence from H-1B Visa Application Deadlines (June 10, 2020). Available at SSRN: https://ssrn.com/abstract=3618000 or http://dx.doi.org/10.2139/ssrn.3618000

Sheng-Jun Xu (Contact Author)

University of Alberta - School of Business ( email )

2-32D Business Building
Edmonton, Alberta T6G 2R6
Canada

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