Skilled Immigration Frictions as a Barrier for Young Firms

Mandelman, Federico S.; Shen, Hewei; dup Mishita, Mehra

doi:10.29338/wp2024-02

Working Paper

Skilled Immigration Frictions as a Barrier for Young Firms

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.

Keywords: skilled immigration; start-ups; high-technology firms; firm dynamics;

JEL Classification: F22; M13;

https://doi.org/10.29338/wp2024-02

Status: Published in 2024