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
Date Written: December 7, 2020
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
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