NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Michael E. Waugh

NBER Working Paper No. 23387
Issued in May 2017
NBER Program(s):EFG, ITI, LS, PR

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.

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Document Object Identifier (DOI): 10.3386/w23387

Forthcoming: Firm Dynamics and Immigration: The Case of High-Skilled Immigration, Michael E. Waugh. in High-Skilled Migration to the United States and its Economic Consequences, Hanson, Kerr, and Turner. 2017

 
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