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Do Foreign Experts Increase the Productivity of Domestic Firms?

Author

Listed:
  • Malchow-Møller, Nikolaj

    () (University of Southern Denmark)

  • Munch, Jakob R.

    () (University of Copenhagen)

  • Skaksen, Jan Rose

    () (Rockwool Foundation Research Unit)

Abstract

While most countries welcome (and some even subsidise) high-skilled immigrants, there is very limited evidence of their importance for domestic firms. To guide our empirical analysis, we first set up a simple theoretical model to show how foreign experts may impact on the productivity and wages of domestic firms. Using matched worker-firm data from Denmark and a difference-indifferences matching approach, we then find that firms that hire foreign experts – defined as employees eligible for reduced taxation under the Danish "Tax scheme for foreign researchers and key employees" – both become more productive (pay higher wages) and increase their exports of goods and services.

Suggested Citation

  • Malchow-Møller, Nikolaj & Munch, Jakob R. & Skaksen, Jan Rose, 2011. "Do Foreign Experts Increase the Productivity of Domestic Firms?," IZA Discussion Papers 6001, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6001
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    References listed on IDEAS

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    Cited by:

    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. 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).
    3. 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.
    4. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    5. Bonin, Holger, 2017. "The Potential Economic Benefits of Education of Migrants in the EU," IZA Research Reports 75, Institute of Labor Economics (IZA).
    6. 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.

    More about this item

    Keywords

    productivity; immigrants; export; foreign experts; difference-in-differences matching;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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