Loss of Peers and Individual Worker Performance: Evidence from H-1B Visa Denials

Abstract

We study how restrictive immigration policies and the unexpected loss of peers affect the performance of skilled migrants, exploiting the unexpected increased denials of H-1B visa extensions in the United States beginning in 2017. We find that employees who lost peers of the same ethnic background experience a substantial decrease in individual performance. To resolve the endogeneity surrounding visa denial decisions, we build an instrumental variable that exploits the fixed duration of the visas. Our mechanism tests suggest that ethnic ties boost individual performance through preferential channels of knowledge and information spillovers.