Working Paper: CEPR ID: DP16870
Authors: Jingting Fan; Eunhee Lee; Valerie Smeets
Abstract: We study firms’ decision to use foreign R&D inputs—immigrant researchers and imported R&D services—and the implications of this use for firm performance and aggregate productivity. Using Danish data, we document that firms with immigrant researchers are more likely to source foreign R&D services and that using either foreign input increases R&D efficiency and firm performance. We develop and estimate a model of firm dynamics that rationalizes these patterns. Counterfactual experiments show that the two foreign inputs play crucial yet complementary roles in R&D. Without access to these inputs, R&D participation and the aggregate return to R&D both would decrease substantially.
Keywords: R&D sourcing; R&D offshoring; high-skill immigration; immigrant researchers; firm productivity
JEL Codes: F14; F22; D24; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Foreign R&D inputs (O36) | R&D participation (O32) |
| Foreign R&D inputs (O36) | Aggregate productivity (E23) |
| Immigrant researchers (J61) | Offshore R&D (O36) |
| Offshore R&D (O36) | Firm productivity (D21) |
| Immigrant researchers + Foreign R&D inputs (F22) | Firm productivity (D21) |