Rowena Gray (UC Merced) will present:
"Processing Immigration Shocks: Firm Responses On The Innovation Margin"
at 3:20pm on Wednesday, December 6, 2017 in 310 Silsby.

Please sign up for a meeting, lunch, or dinner at:
https://docs.google.com/spreadsheets/d/1gZBR2N7FhG-UWRd70S4GUfUF8DxKUNRLdAmto8fzxxI/edit?usp=sharing

ABSTRACT:
The extent to which firms respond to labor supply shocks has important implications for local and national economies. We exploit firm-level panel data on product and process innovation activities in the United Kingdom and find that the large, low-skill labor supply (immigration) shock generated by the 2004 expansion of the European Union to Eastern European countries increased process innovation and reduced product innovation. This implies that the innovation response to labor supply shocks may be more nuanced than the previous literature has suggested. Both of these effects are increasing in the low-skill intensity of firm production. In addition, the reduction in product innovation is lessened for firms whose output is sold locally, which we interpret as evidence for a demand side effect generated by the labor supply shock. We present a model that illustrates the channels through which firms may respond to labor supply shocks, and find that our results are mostly consistent with the model's predictions.






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