Research

Monopsony in the High-Skilled Migrant Labor Market-Evidence from H-1B Petition Data

with Seohee Kim
Presentations: Wharton Migration and Organizations Conference 2022; The Society of Labor Economists (SOLE) Annual Meeting 2023; Imperfect Competition in the Labor Market Workshop 2023, Institutfür Arbeitsmarkt und Berufsforschung (IAB), Nuremberg

Abstract: This paper assesses the extent of monopsony power in the labor market for highly skilled immigrants, focusing on employment concentration and its impact on wages. We obtained the universe of H-1B visa petitions, the largest high-skilled immigration program in the U.S., through a FOIA request. We first discover that the H-1B labor market is 30% more concentrated than the broader U.S. labor market, with a steadily increasing trend over the past decade. We then examine the causal impact of high employment concentration on H-1B workers’ wages by leveraging the lottery system for over-the-cap H-1B applications. The random lottery win rates in each market alter employment concentration, as different-sized firms vary in demand for first-time H-1B applicants, the only group subject to the lottery. Our results indicate that transitioning from the 25th to the 75th percentile of employment concentration results in a 12.2% wage decline, equivalent to a $10.5k salary loss for the median H-1B worker. The wage effects of concentration are primarily borne by first-time H-1B applicants, whose visa status is tied to a single employer. As a suggestive mechanism to these wage effects, we also find evidence that higher concentration leads to less job mobility between H-1B employers. These findings collectively suggest that H-1B policy reform should consider lifting the employer tie for first-time applicants.

Innovation and the Enforceability of Noncompete Agreements

with Matthew Johnson and Michael Lipsitz [NBER Working Paper #31487]
Presentations: Wharton People and Organizations Conference 2022; APPAM 2022; Sixteenth Annual FTC Microeconomics Conference 2023
Media: The Business Journals

Abstract: Worker mobility across firms can enhance innovation by spreading knowledge, but such mobility may also hinder innovation by making firms reluctant to invest in R&D. A common way that firms limit workers’ mobility is with noncompete agreements (NCAs). We examine how the legal enforceability of NCAs affects innovation, as measured by patenting, using data on every state-level NCA enforceability change between 1991–2014. We find that making NCAs easier to enforce (“stricter” enforceability) substantially reduces the rate of patenting: an average-sized increase in NCA enforceability leads a state to have 16-19% fewer citation-weighted patents over the following 10 years. This effect reflects a true loss in innovation rather than a reduction in useless or strategic patents. We then reconcile these findings with contrasting theoretical predictions. Stricter NCA enforceability reduces job mobility and new business formation in innovative industries, suggesting slower knowledge spread. Within publicly-traded firms, stricter NCA enforceability increases investment, but still leads to less innovation, suggesting that any gains from enhanced incentives to invest are more than offset by other ways that NCAs slow down innovation. Finally, using variation in technology classes’ exposure to NCA enforceability changes, we show that the economy-wide losses to innovation from strict enforceability are even larger than what our state-level estimates imply.

OSHA Inspections, Productivity, and Management

with Nicholas Bloom, David Levine and Matthew Johnson