Working Papers

High-skilled Immigrant Workers and U.S. Firms’ Access to Foreign Venture Capital

Abstract: Most developed countries have engaged in a race for global talent, as skilled immigration becomes increasingly imperative in maintaining competitive advantages and galvanizing economic growth through various channels. In this paper, I study a novel firm-level channel, in which skilled immigrant workers potentially drive growth by improving start-ups’ access to international venture capital funding. My first empirical approach makes use of the exogenous variation in firms’ access to high-skilled foreign workers as a result of the H-1B lotteries. To supplement in terms of external validity, I extend the period of analysis and conduct a panel study using ex-post changes in the start-ups' approved skilled workers. In both approaches, I find empirical evidence that having high-skilled foreign workers from a particular country increases firms’ access to venture capital funding from that country. Through home-country professional networks, common language, and cultural familiarity, skilled immigrants reduce investment frictions and information gaps and better facilitate cross-border venture capital investments from their origins, especially in the case of young firms or inexperienced venture capitalists. Lastly, I construct a framework of firms' hiring decisions to incorporate both the standard labor market and foreign venture capital channels. With a numerical exercise, I find that almost one-third of the displacement effect of high-skilled immigrants can be mitigated by the venture capital channel.

Scrambling for Talent: U.S. Startups’ Reactive Strategy to Cope with Visa Restrictions

Abstract: Access to foreign talent is considered a pivotal determinant shaping firm competitive advantage, for its perceived potential to propel growth. U.S. firms heavily rely on skilled immigrant workers to fill critical labor gaps. As the skilled immigration pathways get more restrictive in the U.S., how do U.S. firms respond when those restrictions constrain their ability to obtain the scarce human capital that they need? In this paper, I study an important but overlooked firm response to policy restrictions on skilled immigration - hiring existing visa-holders from other employers, and focus on an important group of firms - startups. My empirical approach uses the exogenous variation in firms’ access to skilled foreign workers as a result of the H-1B visa lotteries. I find that U.S. startups responded to constrained labor supply of new skilled immigrant workers by sourcing existing visa holders from other firms to fill the vacant positions resulting from visa rationing. In pursuing this reactive strategy, they had to pay these workers a substantial salary premium above what was commensurate with skills and experience. Small startups were disproportionally disadvantaged in such labor market scramble, paying almost twice the average salary premium. Besides adopting the reactive strategy, adversely impacted micro startups also proactively adapt their hiring strategy by prioritizing existing visa-holders even prior to visa rationing.

H-1B Lottery and the Selection of Immigrant Workers in the U.S.

Abstract: In recent years, the competition for the H-1B visas has become so intense that a random lottery has been put in place to meet the specific quotas. This paper examines the role of the H-1B lottery in the self-selection of the H-1B immigrant workers in the U.S. Building on the basis of the Roy-Borjas Model, I construct a self-selection framework with the uncertainty in obtaining legal admission into the host country incorporated. As the proposed framework suggests, a decrease in the probability of obtaining the H-1B visas will likely reinforce the direction of the self-selection of international workers, be it positive or negative. Empirically, I use the Form I-129 data from USCIS and find evidence that the presence of the H-1B lottery and its decreasing odds have contributed to the deterioration in the quality of skilled international workers applying for H-1B visas in the U.S.

Migration Networks and Mexican Migrants’ Spatial Mobility in the U.S. (with Brian C. Cadena, Brian K. Kovak, and Rebecca Lessem)

Abstract: Mexican low-skilled migrants are found to be highly mobile when they face labor demand shocks. This paper examines the role of migration networks in Mexican-born immigrants' location choices. We rely on the sizable variation in labor demand declines across states during the Great Recession to identify migration responses to demand shocks and use a novel set of data, the Matricula Consular de Alta Seguridad (MCAS) data, to construct migration network measures. We find that migration networks indeed play an important part in Mexican migrants' responsiveness to local demand shocks. In particular, migrants respond to local economic conditions and conditions in network-connected locations when making location decisions.

Other Published Work

Impact Evaluation of IMDA’s iSPRINT Scheme (with Melinda Poh), Economic Survey of Singapore, November 2016, pp. 40-49

Abstract: The iSPRINT is a financial assistance scheme administered by the Infocomm Media Development Authority (IMDA) Singapore that aims to help local small- and medium-sized enterprises (SMEs) defray the costs of automating their business functions through information technology. Under the scheme, IMDA provides funding support to local SMEs for the first-time automation of each business function. This study seeks to evaluate the impact of the iSPRINT scheme on firms’ revenue performance. Apart from quantifying the overall impact of the iSPRINT scheme, the study also examines whether the effectiveness of the scheme varies across different solution types.