How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program
Skilled immigration restrictions may have secondary consequences that
Does Employing Skilled Immigrants Enhance Competitive Performance? Evidence from European Football Clubs, with Francisco Morales, Seth Carnahan, and Exequiel Hernandez
We investigate the effect of hiring skilled immigrant employees on the performance of organizations. This relationship has been difficult to establish in prior work due to theoretical ambiguity, limited data, and inherent endogeneity. We overcome these difficulties by studying European football (soccer) clubs during 1990-2020. Detailed microdata from this setting offers unusual transparency on the migration and hiring of talent and their contribution to collective performance. Further, the industry is characterized by country-level rule changes that govern the number of immigrant players clubs can hire. Using these rule changes as the basis for instrumental variables, we find a positive local average treatment effect of the number of immigrant players on the club’s in-game performance. To examine the theoretical mechanisms, we explore whether immigrants cause superior performance because they are more talented than natives or because they enhance the national diversity of their clubs. We find strong evidence for the talent mechanism. We find contingent evidence for the national diversity mechanism: national diversity has a positive relationship with club performance only when the club employs an immigrant manager (coach). The presence of an immigrant manager also strengthens the positive relationship between the number of immigrant players and club performance.
Does Offshoring Manufacturing Harm Innovation? Firm-level Evidence from Taiwan,
Does the offshoring of production degrade or enhance the innovative capabilities of manufacturing firms? We contribute to this debate by exploiting a policy shock that differentially affected the ability of Taiwanese firms to offshore some products to China. We find causal evidence that offshoring impacts both the level and nature of innovation. In the technologies
An Executive Order Worth $100 Billion: The Impact of an Immigration Ban’s Announcement on Fortune 500 Firms’ Valuation,
On June 22, 2020, President Trump issued an Executive Order (EO) that suspended new work visas, barring nearly 200,000 foreign workers and their dependents from entering the United States and preventing American companies from hiring skilled
The Effect of Fiscal Stimulus: Evidence from COVID-19,
“Policymakers, faced with different options for replacing lost earnings, have had limited evidence to inform their decisions. The current economic crisis has highlighted the need for data that
Doing Frontier Innovation in Non-Traditional R&D Locations: Lessons from U.S. Multinational Firms,
In recent decades, multinationals have increasingly done R&D in non-traditional R&D destinations, with especially fast growth in emerging markets. This presents a puzzle: R&D is a knowledge-intensive activity, but local knowledge sources in non-traditional locations are often far from the technological frontier. We explain this puzzle by introducing a mechanism by which foreign affiliates can develop their technical capabilities to become active contributors to the multinational’s global innovation effort: utilizing home-based inventors on foreign affiliate inventor teams to facilitate knowledge transfer. Their utilization then declines as local inventors “catch up” technologically. We also provide evidence that the R&D portfolios of multinationals within each country are frequently concentrated in multiple technical areas, so aggregating across different technology areas might hide meaningful variation in firm behavior.
WORK IN PROGRESS
The Effects of Foreign IP Theft on U.S. Firms and Innovation, with Daniel P. Gross and Lia Sheer
Immigrant CEOs, with Prithwiraj Choudhury and Dany Bahar
“The IT Revolution and the Globalization of R&D.”
- with Lee Branstetter and J. Bradford Jensen
Since the 1990s, R&D has not only become less geographically concentrated, but there has been especially fast growth in less developed emerging markets like China and India. One of the distinguishing features of the R&D globalization phenomenon is its concentration within the software/IT domain. The increase in foreign R&D on the firm side has been largely concentrated within software and IT-intensive multinationals. This concentration is mirrored on the country side; new R&D destinations such as India, China, and Israel look very different in the types of innovative activity being done there than older R&D destinations such as Germany, France, the UK, Canada, and Japan. In this paper we will document three important phenomena: (1) the globalization of R& D by US MNCs, (2) the growing importance of software and IT to firm innovation, and (3) the rise of new R&D hubs, and the differences in the type of activity done there. We argue that the shortage in software/IT-related human capital resulting from the large IT- and software-biased shift in innovation drove US MNCs abroad, and particularly drove them abroad to “new hubs” with large quantities of STEM workers who possessed IT and software skills. Our findings support the view that the globalization of US multinational R&D has reinforced the technological leadership of US-based firms in the information technology domain and that multinationals’ ability to access an increasingly global talent base could support a high rate of innovation even in the presence of the rising (human) resource cost of frontier R&D.
Carnegie Mellon University. "Analysis chronicles changes in US investment." ScienceDaily. ScienceDaily, 6 August 2018.
ZDNet. “US companies continue to look overseas for tech talent.” 20 August 2018.
VoxEU. “The IT Revolution and the Globalization of R&D.” 21 August 2018.
CIO Dive. “Demand is driving companies to push IT, software R&D overseas.”
“The Weighty Manufacturing Sector: Transforming Raw Materials into Physical Goods.”
- with Erica R.H. Fuchs, Christophe Combemale, and Kate S. Whitefoot
The manufacturing sector encompasses a diverse set of industries that are involved in the transformation of raw materials into physical goods. Over the last two decades, the U.S.’s manufacturing value added (MVA) has slightly grown, however, the U.S.’s percentage of global MVA has
“The New Global Invention Machine: A Look Inside the R&D Networks of U.S. Multinationals”
- with Lee Branstetter and J. Bradford Jensen
We present evidence showing that US multinational firms are creating a global division of R&D labor akin to global value chains in goods production, where activities are located in regions where production is most efficient. We argue that this system, properly managed, brings global benefits by increasing the innovative capacity of the global economy.
POLICY BRIEFS and OP-EDs
- with Lee Branstetter and J. Bradford Jensen. Chapter 10 in Posen, A. and Ha, J., (eds.), U.S.-China Cooperation in a Changing Global Economy, Peterson Institute Policy Brief 17-1, January 2017.
- with Lee Branstetter and J. Bradford Jensen. Peterson Institute Policy Brief 19-9, June 2019.
Brookings Blog. 20 July 2020.