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Skilled immigration frictions as a barrier for young firms

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  • Mandelman, Federico
  • Mehra, Mishita
  • Shen, Hewei

Abstract

This paper examines the impact of immigration policy frictions on technology-intensive firms by age cohort. The firm-level empirical evidence shows that H-1B policy restrictions on skilled immigrants directly affect the survival of young firms in technology-intensive sectors. We develop a novel general equilibrium model with firm entry and exit that mimics the policy frictions in the H-1B program. The model matches the age distribution of firms in high-technology sectors and shows that immigration policy reforms that increase the entry of younger firms induce greater exit of older, less productive firms, thereby increasing efficiency.

Suggested Citation

  • Mandelman, Federico & Mehra, Mishita & Shen, Hewei, 2025. "Skilled immigration frictions as a barrier for young firms," Journal of Monetary Economics, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:moneco:v:155:y:2025:i:c:s0304393225000820
    DOI: 10.1016/j.jmoneco.2025.103811
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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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