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Labor substitutability and corporate labor investment: Evidence from the H-1B program

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  • Huang, Xinhui
  • Tarkom, Augustine

Abstract

The H-1B program which allows skilled foreign-born individuals to work temporarily in the United States is imperative for corporate employment, yet there is no empirical evidence on how it relates to labor investment efficiency. We examine this relationship and find that an increase in the chance of an H-1B lottery approval is positively associated with an increase in labor investment efficiency. We also provide evidence that the growth in the domestic labor wage dampens the positive effect of the H-1B program on labor investment efficiency. Our study is robust to alternative measures, and estimation techniques, and helps sheds light on the relevance of the H-1B program on corporate hiring decisions.

Suggested Citation

  • Huang, Xinhui & Tarkom, Augustine, 2023. "Labor substitutability and corporate labor investment: Evidence from the H-1B program," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000235
    DOI: 10.1016/j.frl.2023.103649
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    More about this item

    Keywords

    Labor investment efficiency; H-1B lottery; High skilled labor; Wage growth;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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