High-Skill Migration, Multinational Companies and the Location of Economic Activity
68 Pages Posted: 7 Mar 2019 Last revised: 24 Dec 2020
Date Written: December 20, 2020
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
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