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Give Me Your Wired and Your Highly Skilled: Measuring the Impact of Immigration Policy on Employers and Shareholders

  • Lin, Carl


    (Bucknell University)

Registered author(s):

The paper links finance theory to labor economics and political economy in the context of migration and immigration policy. Most research treating the impact of immigration has focused on the consequences for employees as measured by wages, earnings, and employment. Less is known about the impact on employers. We lack answers to basic questions concerning the quantitative impact of immigrants on employer profit, and which employers are most likely to gain (suffer) increased (reduced) profits as a result of immigration. Using event study analysis, I measure the impact of immigration policy on the profit of employers and shareholders, particularly in those industries with high needs for skilled immigrants. The American Competitiveness and Workforce Improvement Act (ACWIA) of 1998 nearly doubled the available number of H-1B visas for skilled foreign workers in FY 1999. It was the first time that the U.S. government raised the annual cap of H-1B visa since 1990. I focus on this bill and analyze whether and by how much its passage increased shareholders’ profit. The empirical results show that employers and shareholders in the top H-1B visa user industries enjoyed significant and positive returns with the passage of the ACWIA of 1998. Shareholders in high-tech industries (the top users of H-1B visa, 80% of total) such as "Computers and related equipment", and "Computer and data processing services" gained, respectively, an average 21.54% (15.88 if weighted) and 22.77% (18.11 if weighted) in cumulative excess returns in the month after the Act was passed, while industries with little need for H-1B visas experienced no significant changes in cumulative excess returns. Robustness testing including international factor comparisons, semiparametric modeling and a sample-split Chow structural break test support the results.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5754.

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Length: 89 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5754
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  1. Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2008. "How Much Does Immigration Boost Innovation?," NBER Working Papers 14312, National Bureau of Economic Research, Inc.
  2. Brian E. Becker & Craig A. Olson, 1986. "The impact of strikes on shareholder equity," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(3), pages 425-438, April.
  3. Giovanni Facchini & Anna Maria Mayda & Prachi Mishra, 2008. "Do Interest Groups Affects US Immigration Policy?," Development Working Papers 256, Centro Studi Luca d\'Agliano, University of Milano.
  4. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, 07.
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  9. Hendry, David F & Doornik, Jurgen A, 1997. "The Implications for Econometric Modelling of Forecast Failure," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(4), pages 437-61, September.
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  13. Cooper, Suzanne & Piehl, Anne Morrison & Braga, Anthony & Kennedy, David, 2001. "Testing for Structural Breaks in the Evaluation of Programs," Working Paper Series rwp01-019, Harvard University, John F. Kennedy School of Government.
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  17. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2007. "Do Interest Groups Affect Immigration?," IZA Discussion Papers 3183, Institute for the Study of Labor (IZA).
  18. Giaccotto, Carmelo & Sfiridis, James M., 1996. "Hypothesis testing in event studies: The case of variance changes," Journal of Economics and Business, Elsevier, vol. 48(4), pages 349-370, October.
  19. Madeline Zavodny, 2003. "The H-1B program and its effects on information technology workers," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 33-43.
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