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Do Foreign Experts Increase the Productivity of Domestic Firms?
Author(s) -
MalchowMøller Nikolaj,
Munch Jakob Roland,
Skaksen Jan Rose
Publication year - 2019
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12286
Subject(s) - productivity , subsidy , matching (statistics) , labour economics , economics , immigration , set (abstract data type) , business , macroeconomics , market economy , statistics , mathematics , computer science , programming language , history , archaeology
While most countries welcome (and some even subsidize) high‐skilled immigrants, there is very limited evidence of their importance for domestic firms. To guide our empirical analysis, we first set up a simple theoretical model to show how foreign experts can affect the productivity and wages of domestic firms. Using matched worker–firm data from Denmark and a matching difference‐in‐differences approach, we then find that firms that hire foreign experts instead of domestic experts become more productive, in the sense that they pay higher wages to high‐skilled co‐workers.