Skilled Immigration Frictions as a Barrier for Young Firms Authors:

The period with higher immigration policy frictions since 2005 witnessed a lower average exit rate of older firms, an increase in the average share of older firms, and an increase in the share of the smallest (less productive) firms within the oldest firms in the high-tech sectors. [...] In the second step, we use the firms’ policy functions we found in the first step to simulate the distribution of the sector 1 firms, calculate the aggregate variables, and check whether the skilled domestic labor market clears. [...] The fraction of type-f firms in the high-tech sector that hire skilled foreign workers is computed as the average proportion of high-tech firms that submit LCAs, and the type-d fraction is just 1− the type-f fraction.20 Ldemandf refers to the total demand for skilled foreign workers, that is, the sum of demand by the type-f firms that are facing favorable and unfavorable hiring shocks (referred to. [...] The corresponding target in the data is computed as the total number of LCAs filed by firms in the high-tech sector (USCIS) as a proportion of total employment in the high-tech sector (BDS). [...] On the other hand, the total effects (including both the extensive and intensive margins) of relaxed immigration policies reduce the welfare of skilled domestic workers by 9.5 percent, indicating a 17.9 percent increase in the welfare of these workers by the extensive margin relative to the baseline case.