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Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations

Author

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  • Mo Shen
  • David Denis

Abstract

This paper studies how the labor market frictions of skilled workers affect corporate valuation. The analysis features immigrant workers’ mobility constraints imposed by the U.S. green card application process and exploits exogenous variations caused by imperfections in the current immigration system. The study finds that relaxing mobility constraints negatively influences firm value. This effect is stronger for firms with higher labor adjustment costs. Reductions in investments and increases in labor costs are channels through which labor mobility adversely affects firm value. The findings suggest that monopoly rent over skilled workers is an important economic determinant of corporate valuation.

Suggested Citation

  • Mo Shen & David Denis, 2021. "Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations," The Review of Financial Studies, Society for Financial Studies, vol. 34(10), pages 4663-4700.
    • Handle: RePEc:oup:rfinst:v:34:y:2021:i:10:p:4663-4700.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhab014
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    Citations

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    Cited by:

    1. Bae, Jaewan & Kang, Jangkoo, 2023. "Human capital quality and stock returns," Journal of Banking & Finance, Elsevier, vol. 152(C).
    2. YunGuo Liu & Minghui Zheng & Yue Xu & Sujuan Xie, 2023. "Deleveraging for talents: Human capital reliance and corporate leverage," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 4823-4847, December.
    3. Beuselinck, Christof & Markarian, Garen & Verriest, Arnt, 2021. "Employee protection shocks and corporate cash holdings," Journal of Corporate Finance, Elsevier, vol. 69(C).

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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