Forthcoming Paper – Absorption of Foreign Knowledge: The Impact of Immigrants on Firm Productivity

This new forthcoming paper “Absorption of Foreign Knowledge: The Impact of Immigrants on Firm Productivity” by Sanne Kruse-Becher, together with Erkan Gören (Carl von Ossietzky Universität Oldenburg) and Jürgen Bitzer (Carl von Ossietzky Universität Oldenburg) has been accepted for publication in “Industrial and Corporate Change”.


What role do immigrants play in firms’ ability to absorb and apply foreign knowledge? Based on a matched employer-employee dataset from Danish manufacturing firms over the period 2001 to 2011, this study examines the impact of foreign knowledge accessible by firms’ immigrant employees on firm-level total factor productivity (TFP). We construct various firm-specific absorbable foreign knowledge measures that link firms’ immigrant employees to the technological knowledge base of their country of origin. The empirical results suggest that firms employing immigrant employees have higher firm-level TFP outcomes and a higher probability of new firm-level patent applications. The average productivity gain associated with the hiring of one immigrant employee is about 1.5 percent in the year following the firm’s hiring decision. Additional results show that the estimated productivity increase varies with the level of education and the occupational positions of the immigrant employees. The results are robust to the inclusion of a large range of firm-specific controls and various sensitivity checks.