The role of high-skilled foreign labor in startup performance : Evidence from two natural experiments

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)430-452
Journal / PublicationJournal of Financial Economics
Issue number1
Online published31 May 2021
Publication statusPublished - Oct 2021


We examine the role of high-skilled foreign labor in VC-backed startups through two natural experiments. First, we show that winning more H-1B visas in random lotteries enhances VC-backed startups’ financial performance, likelihood of going public, and quantity and quality of innovation. Second, we show that the H-1B quota reduction in 2004 caused permanent damage to the performance of startups that previously had used H-1B workers. The findings imply that high-skilled foreign workers possess skills or talents that are difficult to replace and that barriers to securing H-1B visas lower startups’ innovation and financial performance.

Research Area(s)

  • H-1B visa, High-skilled foreign labor, Initial public offerings (IPOs), Innovation, VC-backed companies