Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations

Forthcoming, The Review of Financial Studies

63 Pages Posted: 19 Nov 2020 Last revised: 20 Mar 2021

See all articles by Mo Shen

Mo Shen

Harbert College of Business, Auburn University

Date Written: December 7, 2020

Abstract

This paper studies how the labor market frictions of skilled workers affect corporate valuation. The analysis features immigrant workers’ mobility constraints imposed by the U.S. green card application process and exploits exogenous variations caused by imperfections in the current immigration system. The study finds that relaxing mobility constraints negatively influences firm value. This effect is stronger for firms with higher labor adjustment costs. Reductions in investments and increases in labor costs are channels through which labor mobility adversely affects firm value. The findings suggest that monopoly rent over skilled workers is an important economic determinant of corporate valuation.

Keywords: skilled workers, labor mobility, firm value, immigration, investments, wages

JEL Classification: G30, G32, G38, J20, J24, J40, J61, J68

Suggested Citation

Shen, Mo, Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations (December 7, 2020). Forthcoming, The Review of Financial Studies, Available at SSRN: https://ssrn.com/abstract=3702950 or http://dx.doi.org/10.2139/ssrn.3702950

Mo Shen (Contact Author)

Harbert College of Business, Auburn University ( email )

405 West Magnolia Ave
Auburn, AL 36849
United States

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