Labor Mobility, Entrepreneurship, and Firm Monopsony: Evidence from Immigration Wait-Lines

81 Pages Posted: 23 May 2023

See all articles by Abhinav Gupta

Abhinav Gupta

University of North Carolina (UNC) at Chapel Hill - Finance Area

Date Written: May 16, 2023

Abstract

This paper provides causal evidence on impact of immigrant labor mobility frictions on business dynamism. An unexpected information-technology change to the Green Card process reduced inter-firm mobility for Indian and Chinese immigrants in October 2005. The shock impacted startups disproportionately, reducing Indian and Chinese mobility to startups by twice of incumbent firms. Distortions in immigrant labor availability decreased new startup formation and existing startup growth. Incumbent firms benefited from mobility restrictions with increases in daily returns and long-term Tobin’s Q. Slowdown in internal promotions for Indian and Chinese employees suggest monopsony power as an important driver for incumbent firm value.

Keywords: Immigration, Monopsony, Entrepreneurship

JEL Classification: J61, MA13, J42, G31, G32

Suggested Citation

Gupta, Abhinav, Labor Mobility, Entrepreneurship, and Firm Monopsony: Evidence from Immigration Wait-Lines (May 16, 2023). Available at SSRN: https://ssrn.com/abstract=4450105 or http://dx.doi.org/10.2139/ssrn.4450105

Abhinav Gupta (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

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