IDEAS home Printed from https://ideas.repec.org/p/old/dpaper/386.html
   My bibliography  Save this paper

Absorption of Foreign Knowledge: Firms’ Benefits of Employing Immigrants

Author

Listed:
  • Jürgen Bitzer

    (University of Oldenburg, Department of Economics)

  • Erkan Gören

    (University of Oldenburg, Department of Economics)

  • Sanne Hiller

    (Ruhr University Bochum)

Abstract

This paper explores the question of how immigrant employees affect a firm’s capacity to absorb foreign knowledge. Using matched employer-employee data from Denmark for the years 1996 to 2009, we are able to show that non-Danish employees from technologically advanced countries contribute significantly to a firm’s total factor productivity (TFP) through their ability to access foreign knowledge. The empirical results suggest that the impact increases if the immigrants come from technologically advanced countries, are highly educated, and work in high-skilled positions.

Suggested Citation

  • Jürgen Bitzer & Erkan Gören & Sanne Hiller, 2015. "Absorption of Foreign Knowledge: Firms’ Benefits of Employing Immigrants," Working Papers V-386-15, University of Oldenburg, Department of Economics, revised Oct 2015.
    • Handle: RePEc:old:dpaper:386
    as

    Download full text from publisher

    File URL: http://www.uni-oldenburg.de/fileadmin/user_upload/wire/fachgebiete/vwl/V-386-15.pdf
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    2. Mr. David T. Coe & Mr. Willy A Hoffmaister, 1999. "Are There International R&D Spillovers Among Randomly Matched Trade Partners? A Response to Keller," IMF Working Papers 1999/018, International Monetary Fund.
    3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    4. Wolfgang Keller, 2002. "Geographic Localization of International Technology Diffusion," American Economic Review, American Economic Association, vol. 92(1), pages 120-142, March.
    5. Keller, Wolfgang, 1998. "Are international R&D spillovers trade-related?: Analyzing spillovers among randomly matched trade partners," European Economic Review, Elsevier, vol. 42(8), pages 1469-1481, September.
    6. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    7. Markusen, James R. & Trofimenko, Natalia, 2009. "Teaching locals new tricks: Foreign experts as a channel of knowledge transfers," Journal of Development Economics, Elsevier, vol. 88(1), pages 120-131, January.
    8. Amil Petrin & Jagadeesh Sivadasan, 2013. "Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 286-301, March.
    9. Bosetti, Valentina & Cattaneo, Cristina & Verdolini, Elena, 2015. "Migration of skilled workers and innovation: A European Perspective," Journal of International Economics, Elsevier, vol. 96(2), pages 311-322.
    10. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    11. Jennifer P. Poole, 2013. "Knowledge Transfers from Multinational to Domestic Firms: Evidence from Worker Mobility," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 393-406, May.
    12. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
    13. Nikolaj Malchow‐Møller & Jakob Roland Munch & Jan Rose Skaksen, 2019. "Do Foreign Experts Increase the Productivity of Domestic Firms?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 517-546, April.
    14. Wesley M. Cohen & Daniel A. Levinthal, 1994. "Fortune Favors the Prepared Firm," Management Science, INFORMS, vol. 40(2), pages 227-251, February.
    15. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    16. William R. Kerr, 2008. "Ethnic Scientific Communities and International Technology Diffusion," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 518-537, August.
    17. Devesh Kapur, 2001. "Diasporas and Technology Transfer," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 2(2), pages 265-286.
    18. Olof Åslund & Lena Hensvik & Oskar Nordström Skans, 2014. "Seeking Similarity: How Immigrants and Natives Manage in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 405-441.
    19. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    20. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    21. Pierpaolo Parrotta & Dario Pozzoli, 2012. "The effect of learning by hiring on productivity," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 167-185, March.
    22. Agrawal, Ajay & Kapur, Devesh & McHale, John, 2008. "How do spatial and social proximity influence knowledge flows? Evidence from patent data," Journal of Urban Economics, Elsevier, vol. 64(2), pages 258-269, September.
    23. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    24. Ernst R. Berndt & Jack E. Triplett, 1991. "Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth," NBER Books, National Bureau of Economic Research, Inc, number bern91-1, March.
    25. Bastos, Paulo & Silva, Joana, 2012. "Networks, firms, and trade," Journal of International Economics, Elsevier, vol. 87(2), pages 352-364.
    26. Mitaritonna, Cristina & Orefice, Gianluca & Peri, Giovanni, 2014. "Immigrants and Firms' Productivity: Evidence from France," IZA Discussion Papers 8063, Institute of Labor Economics (IZA).
    27. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    28. Ragnhild Balsvik, 2011. "Is Labor Mobility a Channel for Spillovers from Multinationals? Evidence from Norwegian Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 285-297, February.
    29. Mette Foged & Giovanni Peri, 2016. "Immigrants' Effect on Native Workers: New Analysis on Longitudinal Data," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 1-34, April.
    30. Giovanni Peri & Francisco Requena‐Silvente, 2010. "The trade creation effect of immigrants: evidence from the remarkable case of Spain," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(4), pages 1433-1459, November.
    31. Ernst R. Berndt & Jack E. Triplett, 1991. "Introduction to "Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth"," NBER Chapters, in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 1-2, National Bureau of Economic Research, Inc.
    32. Andreas Hatzigeorgiou & Magnus Lodefalk, 2015. "Trade, Migration and Integration – Evidence and Policy Implications," The World Economy, Wiley Blackwell, vol. 38(12), pages 2013-2048, December.
    33. ., 2006. "Social Capital," Chapters, in: David Alexander Clark (ed.), The Elgar Companion to Development Studies, chapter 112, Edward Elgar Publishing.
    34. Sanne Hiller, 2013. "Does immigrant employment matter for export sales? Evidence from Denmark," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 369-394, June.
    35. Markus Eberhardt & Christian Helmers, 2010. "Untested Assumptions and Data Slicing: A Critical Review of Firm-Level Production Function Estimators," Economics Series Working Papers 513, University of Oxford, Department of Economics.
    36. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    37. Arrow, Kenneth J, 1969. "Classificatory Notes on the Production and Transmission of Technological Knowledge," American Economic Review, American Economic Association, vol. 59(2), pages 29-35, May.
    38. Chantal Nielsen, 2011. "Immigrant over-education: evidence from Denmark," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(2), pages 499-520, April.
    39. Andrey Stoyanov & Nikolay Zubanov, 2012. "Productivity Spillovers across Firms through Worker Mobility," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 168-198, April.
    40. Charles R. Hulten, 1991. "The Measurement of Capital," NBER Chapters, in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 119-158, National Bureau of Economic Research, Inc.
    41. Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, vol. 104(3), pages 112-114, September.
    42. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.
    43. Anne Kaag Andersen, 2002. "Are Commuting Areas Relevant for the Delimitation of Administrative Regions in Denmark?," Regional Studies, Taylor & Francis Journals, vol. 36(8), pages 833-844.
    44. Arturs Kalnins & Wilbur Chung, 2006. "Social Capital, Geography, and Survival: Gujarati Immigrant Entrepreneurs in the U.S. Lodging Industry," Management Science, INFORMS, vol. 52(2), pages 233-247, February.
    45. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bastos, Paulo & Silva, Joana, 2012. "Networks, firms, and trade," Journal of International Economics, Elsevier, vol. 87(2), pages 352-364.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jürgen Bitzer & Erkan Gören & Sanne Hiller, 2014. "International Knowledge Spillovers: The Benefits from Employing Immigrants," Working Paper Series in Economics 323, University of Lüneburg, Institute of Economics.
    2. Marino, Marianna & Parrotta, Pierpaolo & Pozzoli, Dario, 2016. "Educational diversity and knowledge transfers via inter-firm labor mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 168-183.
    3. Keller, Wolfgang, 2010. "International Trade, Foreign Direct Investment, and Technology Spillovers," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 793-829, Elsevier.
    4. Gong, Guan & Keller, Wolfgang, 2003. "Convergence and polarization in global income levels: a review of recent results on the role of international technology diffusion," Research Policy, Elsevier, vol. 32(6), pages 1055-1079, June.
    5. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute of Labor Economics (IZA).
    6. Kancs, d’Artis & Siliverstovs, Boriss, 2016. "R&D and non-linear productivity growth," Research Policy, Elsevier, vol. 45(3), pages 634-646.
    7. Nikolaj Malchow‐Møller & Jakob Roland Munch & Jan Rose Skaksen, 2019. "Do Foreign Experts Increase the Productivity of Domestic Firms?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(2), pages 517-546, April.
    8. Trax, Michaela & Brunow, Stephan & Suedekum, Jens, 2015. "Cultural diversity and plant-level productivity," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 85-96.
    9. Markus Eberhardt & Christian Helmers & Hubert Strauss, 2013. "Do Spillovers Matter When Estimating Private Returns to R&D?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 436-448, May.
    10. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    11. Egger, Peter H. & Erhardt, Katharina & Lassmann, Andrea, 2019. "Immigration and firms’ integration in international production networks," European Economic Review, Elsevier, vol. 111(C), pages 1-34.
    12. Massimiliano Bratti & Luca De Benedictis & Gianluca Santoni, 2020. "Immigrant entrepreneurs, diasporas, and exports," Journal of Regional Science, Wiley Blackwell, vol. 60(2), pages 249-272, March.
    13. Dasgupta, Kunal, 2012. "Learning and knowledge diffusion in a global economy," Journal of International Economics, Elsevier, vol. 87(2), pages 323-336.
    14. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 49055, University Library of Munich, Germany, revised 12 Aug 2013.
    15. Bastian Stockinger & Katja Wolf, 2019. "The Productivity Effects of Worker Mobility Between Heterogeneous Firms," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 492-522, November.
    16. Keith Head & Yao Amber Li & Asier Minondo, 2019. "Geography, Ties, and Knowledge Flows: Evidence from Citations in Mathematics," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 713-727, October.
    17. Dr Max Nathan, 2013. "The wider economic impacts of high-skilled migrants: a survey of the literature," National Institute of Economic and Social Research (NIESR) Discussion Papers 413, National Institute of Economic and Social Research.
    18. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    19. Magnus Lodefalk, 2016. "Temporary expats for exports: micro-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 733-772, November.
    20. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    R&D Spillovers; Absorptive Capacity; Firm-Level Analysis; Foreign Workers; Immigrants;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:old:dpaper:386. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catharina Schramm (email available below). General contact details of provider: https://edirc.repec.org/data/fwoldde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.