High-Skill Migration, Multinational Companies and the Location of Economic Activity

68 Pages Posted: 7 Mar 2019 Last revised: 24 Dec 2020

See all articles by Nicolas Morales

Nicolas Morales

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: December 20, 2020

Abstract

The purpose of this paper is to understand the relationship between high-skill immigration and multinational activity. I assemble a novel firm-level dataset on high-skill visa applications and show that there is a large home-bias effect, such that foreign multinational enterprises (MNEs) in the US tend to hire more migrant workers from their home countries compared to US firms. I build and estimate a quantitative model that includes trade, MNE production, and the migration decisions of high-skill workers. The model is then used to run two main counterfactual exercises. The first one evaluates the implications of a more restrictive immigration policy in the US. High-skill industries in the US predominantly reallocate to India and Canada, while real wages decrease for US workers. In the second counterfactual exercise, I increase the barriers to MNE production and find that modeling migration significantly affects the quantitative welfare gains generated by MNEs.

Keywords: High-Skill Immigration, H-1B Visas, Multinational Companies, IT Sector

JEL Classification: F16, F22, F23, J61

Suggested Citation

Morales, Nicolas, High-Skill Migration, Multinational Companies and the Location of Economic Activity (December 20, 2020). Available at SSRN: https://ssrn.com/abstract=3336003 or http://dx.doi.org/10.2139/ssrn.3336003

Nicolas Morales (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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