Job Market Paper

Labor Mobility, Firm Monopsony, and Entrepreneurship: Evidence from Immigration Wait-Lines

Doctoral Symposium and Travel Research Grant at Midwest Finance Association (2022), Runner-Up for Best Doctoral Paper at Eastern Finance Association (2022)
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This paper examines how US immigration-induced labor mobility frictions affect firm monopsony power and entrepreneurship. I exploit a natural experiment in the US immigration system that unexpectedly increased Green Card (GC) related job-switching frictions for Indian and Chinese immigrants in October 2005. Using matched employee-employer data from LinkedIn, I confirm that this shock reduced inter-firm employee mobility for Indian and Chinese employees. I rule out other explanations such as changes in employee composition, selection effects, or concurrent changes in India or China driving my results. This sudden decrease in labor mobility increased incumbent firm value, with $28.7 billion in abnormal stock returns for firms with Indian and Chinese employees in the ten days following the announcement. The slowdown of internal promotions for Indian and Chinese employees suggests monopsony power as the primary channel increasing firm value. The shock to immigrant mobility also had an adverse impact on entrepreneurship. Immigration related mobility restrictions disproportionately lowered the propensity of Indian and Chinese employees to join startups compared to incumbent firms. This distortion in labor supply to startups reduced new firm formation, with 12,000 fewer new firmed founded in markets with more Indian and Chinese employees over the next five years. The distortion also decreased the funding and IPO of existing startups that had Indian and Chinese co-founders. These results reinforce the differential impact of labor mobility on incumbents and startups, providing direct causal evidence of the impact of labor mobility on business dynamism.

Presentations: Midwest Finance Association, Eastern Finance Association, NBER Conference on Immigrants and the US Economy (Scheduled), Fordham Financial Market Workshop, Student Session at Workshop For Finance and Innovation (SEFI), NYU Stern, Inter-Finance PhD Seminar


International Trade and Social Connectedness

with Mike Bailey, Sebastian Hillenbrand, Theresa Kuchler, Robert Richmond, & Johannes Stroebel
Published: Journal of International Economics, 129, 2021, 0022-1996
Data Links: SCI Data, Replication

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We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 332 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions may be large. The social connections that predict trade in specific products are those between the regions where the product is produced in the exporting country and the regions where it is used in the importing country. Once we control for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially.

Working Papers

Owner Incentives and Performance in Healthcare: Evidence from Private Equity

with Atul Gupta, Sabrina Howell, & Constantine Yannelis
Media Coverage: Market Watch, Financial Times, New York Times, Time, The Washington Post, Arnold Ventures, Vox, NPR: All Things Considered, & Sabrina’s testimony at House Ways and Means Oversight Sub-Committee (March 2021)
Awards: Best Paper in Health and Finance by Midwest Finance Association (2021)

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Relative to conventional private ownership, private equity (PE) ownership creates higher-powered incentives to maximize profits. We study how PE affects firm performance in healthcare, focusing on nursing homes and exploiting patient-level data from Medicare. PE-owned nursing homes appear to select less risky patients, so we use distance as an instrument to control for unobserved selection. We find that PE ownership increases short-term mortality by 13% and reduces other measures of patient well-being, while also increasing revenue per patient by 10%. Clinical and operational changes help to explain these effects, including declines in nursing staff and lower compliance with care standards.

Presentations (Presentations by co-authors denoted with *): Adam Smith Workshop, SFS Cavalcade, NBER Health Care Summer Institute*, UBC Winter Finance Conference*, Whistler Junior Health Economics Summit*, Virtual Corporate Finance Seminar*, ESSEC*, Norwegian School of Economics*, Oklahoma Price*, PE Research Consortium (PERC) Annual Symposium*, Tulane*, NYU Stern*, Yale Health Policy*, Oregon Lundquist*, European Finance Association (EFA)*, Midwest Finance Association (MFA)*, Financial Intermediation Research Society (FIRS)*, & ASHEcon*