https://macropaperwarehouse.com/authors/hewei-shen/Hewei ShenHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/skilled-immigration-frictions-as-a-barrier-for-young-firms/https://macropaperwarehouse.com/papers/skilled-immigration-frictions-as-a-barrier-for-young-firms/<p>High-skilled immigration policy frictions—particularly the H-1B visa lottery, fixed annual cap, and associated compliance costs—impose well-known burdens on firms, but their disproportionate impact on young, technology-intensive companies has received less attention. This paper provides the first study combining firm-level panel data on H-1B outcomes with a general equilibrium model of firm dynamics to quantify these effects. Using the random allocation of H-1B visas in the FY 2014 and FY 2015 lotteries as quasi-random variation, the authors find that lower H-1B visa win rates significantly reduce the survival of young firms (aged 0–5) in technology-intensive sectors, while the impact for older firms is not statistically significant. A general equilibrium model with endogenous firm entry and exit, skilled foreign labor, and H-1B-style policy frictions matches the age distribution of high-tech firms and shows that eliminating major immigration policy frictions would increase average productivity in the high-tech sector primarily by enabling more young firms to enter and survive, which in turn drives the exit of older, less productive firms.</p>