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Briefing
Supply Chain Resilience and the Effects of Economic Shocks
Supply chains have long been integral to the U.S. economy, allowing firms to capitalize on specialization and efficiency. However, recent developments like the COVID-19 pandemic, global geopolitical tensions and increasing climate risk have revealed their vulnerabilities as well as their abilities to propagate and amplify economic shocks. In response, firms and policymakers are increasingly focusing on strategies to bolster supply chain resilience. This article explores how economic shocks can propagate through the supply chain, the trade-offs associated with resilience investments, and ...
Working Paper
Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments
We use a detailed establishment-level dataset from Germany to document a new dimension of firm heterogeneity: large firms spend a higher share of their wage bill on immigrants than small firms. We show analytically that ignoring this heterogeneity in the immigrant share leads to biased estimates of the welfare gains from immigration. To do so, we set up and estimate a model where heterogeneous firms choose their immigrant share and then use it to quantify the welfare effects of an increase in the number of immigrants in Germany. Two new adjustment mechanisms arise under firm ...
Briefing
How Much Do Multinational Companies in the U.S. Depend on Immigrant Workers?
Foreign multinational firms that operate in the U.S. hire more immigrants from their home countries than from other countries, in part because they facilitate communication between the parent company and the subsidiaries in the U.S. Restrictions to immigration in the U.S. can cause the relocation of production to countries such as India and Canada. Multinational companies drive a big part of this relocation, since they are more intensive on immigrants.
Working Paper
The IT Boom and Other Unintended Consequences of Chasing the American Dream
We study how US immigration policy and the Internet boom affected not just the US, but also led to a tech boom in India. Students and workers in India acquired computer science skills to join the rapidly growing US IT industry. As the number of US visas was capped, many remained in India, enabling the growth of an Indian IT sector that eventually surpassed the US in IT exports. We leverage variation in immigration quotas and US demand for migrants to show that India experienced a 'brain gain' when the probability of migrating to the US was higher. Using detailed data on higher education, ...
Briefing
How Do College-Educated Immigrants Affect US Firms and Workers?
We study the impact of hiring a college-educated immigrant through the H-1B lottery on the performance and hiring behavior of U.S. firms. When firms win the H-1B lottery, they expand in terms of employment and revenues. Lottery winners are also more likely to stay active. The firms that benefit the most from immigrant workers are small, high-productivity firms. A majority of existing workers at the firm benefit from being exposed to an H-1B coworker, but there are interesting dynamics across different types of workers that we further elucidate.
Briefing
Can Immigration Help Boost Rural Economies in the Fifth District and Beyond
We examine the role of immigration in rural areas. While immigrants tend to concentrate in urban areas, rural areas also significantly benefit from immigration. Agricultural firms, for example, need to hire many immigrants to help with harvesting crops. Past restrictions to immigration in rural areas haven't proven to be very effective in boosting native worker employment in these areas. First, firms respond to such restrictions by investing in new technologies at the expense of labor. Also, native workers seem unwilling to take many jobs in rural areas, which makes immigrants particularly ...
Working Paper
High-Skill Migration, Multinational Companies, and the Location of Economic Activity
This paper examines 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. Foreign multinational enterprises (MNEs) in the US tend to hire more migrant workers from their home countries compared to US firms. To quantify the general equilibrium implications for production and welfare, I build and estimate a quantitative model that includes trade, MNE production, and the migration decisions of high-skill workers. I use an instrumental variables approach to ...
Briefing
What Makes Supply Chains More Resilient to Economic Shocks?
The recent supply chain disruptions caused by COVID-19 lockdowns highlighted the importance of understanding supply chain resilience, which is the extent to which supply chains can resist, adapt to and recover from a sudden economic shock. We analyze the various COVID-19 lockdowns across India to understand which supply chains were more resilient to the lockdown disruptions. Firms that bought more complex products and that transacted with fewer and more important suppliers proved to be more resilient by maintaining buyer-supplier relationships through the lockdowns and exhibiting smaller ...
Working Paper
The Impact of Immigration on Firms and Workers: Insights from the H-1B Lottery
We study how random variation in the availability of highly educated, foreign-born workers impacts firm performance and recruitment behavior. We combine two rich data sources: 1) administrative employer-employee matched data from the US Census Bureau; and 2) firm-level information on the first large-scale H-1B visa lottery in 2007. Using an event-study approach, we find that lottery wins lead to increases in firm hiring of college-educated, immigrant labor along with increases in scale and survival. These effects are stronger for small, skill-intensive, and high-productivity firms that ...