Asian Perspective Seminar Series no.5 - Zhiling Wang 25 June 2024

Bridging Borders: The Impact of Temporary High-Skilled Immigration on Offshoring and Firm Performance   

Abstract: Using a policy change in the Netherlands in 2012 that made it easier and less costly for firms to employ high-skilled short-stay non-EU workers and a matched employer-employee data, we show that firms in high-skill industries respond by both employing a higher share of non-EU immigrants, increasing total employment, and offshoring to non-EU countries. With reduced costs of hiring short-stay non-EU workers, small firms, typically more constrained than large firms, hire more non-EU workers in a given year. Many of these short-term workers return to their home countries, establishing direct connections that boost offshoring to firms in the Netherlands. Large firms, on the other hand, absorb some of the workers leaving the small firms. These workers also establish connections between their host and origin countries, boosting offshoring. The increased access to both immigrant worker and offshoring increases exports by small firms, especially of high-skill intensive differentiated goods.