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Firm Dynamics and Immigration: The Case of High-Skilled Immigration

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  • Michael E. Waugh

Abstract

This paper shows how the dynamics of the firm yield new insights into the short- and long-run economic outcomes from changes in immigration policy. I quantitatively illustrate these insights by evaluating two policies: an expansion of and the elimination of the H-1B visa program for skilled labor. A change in policy changes firms’ entry and exit decisions as they dynamically respond to changes in market size. The dynamic response of firms amplifies changes in relative wages as labor demand shifts with the distribution of firms. Firms’ responses also lead to the rapid accrual of aggregate gains/losses in output and consumption. The welfare implications of policy changes depend critically on who bears the burden of creating new firms.

Suggested Citation

  • Michael E. Waugh, 2017. "Firm Dynamics and Immigration: The Case of High-Skilled Immigration," NBER Working Papers 23387, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23387
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    References listed on IDEAS

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    1. George Alessandria & Horag Choi & Kim Ruhl, 2014. "Trade Adjustment Dynamics and the Welfare Gains from Trade," Working Papers 14-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 5, pages 177-213 World Scientific Publishing Co. Pte. Ltd..
    3. Ryan Decker & John Haltiwanger & Ron Jarmin & Javier Miranda, 2014. "The Role of Entrepreneurship in US Job Creation and Economic Dynamism," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 3-24, Summer.
    4. William W. Olney, 2013. "Immigration And Firm Expansion," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 142-157, February.
    5. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
    6. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-938, October.
    7. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1335-1374.
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    More about this item

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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