Skilled Labor Uncertainty and Corporate Investment: Evidence from H-1B Visa Lottery Cycles

We study how periodic uncertainty about skilled labor supply affects corporate investment using the H-1B visa program for skilled workers as an empirical setting. Exploiting cross-regional variation in H-1B labor flows based on historical immigrant enclaves, we find that firms in regions that attract more H-1B workers concentrate their investments in the quarter after uncertainty about visa access is resolved by the H-1B lottery. Consistent with a skilled labor uncertainty channel, we find that the investment spikes are confined to industries where invested capital cannot be easily redeployed, to firms that cannot easily find domestic substitutes for lost H-1B workers, and to firms that cannot easily arrange alternative employment visas for their foreign employees.

This paper was accepted by Camelia Kuhnen, finance.

Funding: S.-J. Xu gratefully acknowledges research support from the University of Alberta.

Supplemental Material: The internet appendix and data files are available at https://doi.org/10.1287/mnsc.2023.03486.