Skilled Immigration, R&D Concentration, and Industry Consolidation

52 Pages Posted: 13 Feb 2024 Last revised: 27 Mar 2024

Date Written: January 26, 2024

Abstract

Abstract: We demonstrate a novel link between skilled immigration restrictions and corporate innovation and industry consolidation. Binding restrictions on H1B visas are a shock to firms’ R&D labor supply, leading firms to shift R&D expenditures and employees overseas. Organizationally and financially constrained firms are less able to adjust to the restrictions. They reduce basic research and patenting, are less able to acquire other firms for intellectual property, and are more likely to exit. Industry concentration and firm level markups increase when firms are better able to adjust. This increase in market power is an unintended consequence of skilled immigration restrictions.

Keywords: Innovation, R&D, Patent, H1B, Immigration, Industry consolidation, Organizational constrain, Financial constrain, Acquisition

JEL Classification: G30, G34, G38

Suggested Citation

Baxamusa, Mufaddal H. and Aggarwal, Rajesh K., Skilled Immigration, R&D Concentration, and Industry Consolidation (January 26, 2024). Northeastern U. D’Amore-McKim School of Business Research Paper No. 4707558, Available at SSRN: https://ssrn.com/abstract=4707558 or http://dx.doi.org/10.2139/ssrn.4707558

Mufaddal H. Baxamusa (Contact Author)

University of St. Thomas ( email )

1000 LaSalle Ave.
Minneapolis, MN 55403
United States

Rajesh K. Aggarwal

Northeastern University ( email )

413 Hayden Hall
360 Huntington Avenue
Boston, MA 02115
United States

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