Federico S. Mandelman, Mishita Mehra, and Hewei Shen
Working Paper 2024-2
February 2024
Abstract:
This paper studies the impact of skilled immigration policy frictions in the United States on technology-intensive firms by age cohorts. We use firm-level data and a general equilibrium model with endogenous firm entry and exit. The empirical results show that skilled immigration policy frictions directly influence young firm dynamics in technology-intensive sectors by affecting firm survival. Our general equilibrium model incorporates skilled foreign labor and immigration policy frictions that mimic the H-1B policy and matches the age distribution of firms in high-technology sectors, showing also that increased entry of younger firms leads to a greater exit of older firms.
JEL classification: F22, M13
Key words: skilled immigration, start-ups, high-technology firms, firm dynamics
https://doi.org/10.29338/wp2024-02
The authors thank seminar participants at the University of Washington, Wharton Migration and Organizations Conference, Liberal Arts Macroeconomic Conference, Virginia Commonwealth University, and the ASSA meeting for helpful comments. They also acknowledge Nick Croteau and Li Guo for excellent research assistance. Hewei Shen is thankful for support from the Center for Growth and Opportunity and the Junior Faculty Summer Fellowship from the Dodge Family College of Arts and Sciences at the University of Oklahoma. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.
Please address questions regarding content to Federico S. Mandelman, Federal Reserve Bank of Atlanta, Research Department, 1000 Peachtree St. NE, Atlanta, GA 30309-4470, 404-498-8785; Mishita Mehra, Robins School of Business, University of Richmond; or Hewei Shen, Department of Economics, University of Oklahoma.
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