Immigration and firm performance : evidence from Norway : an examination of the effect of employed immigrants on firm financial performance

2019

This thesis examines the empirical relationship between employed immigrants and

firm financial performance in Norway during the period 2001-2008. More specifically,

we estimate the effect of working immigrants on the firm performance measures

of Return on Assets and Return on Equity. Using micro-level data on Norwegian

firms and municipal-level shares of employed immigrants, we find that the effect

of immigrants vary depending on the empirical method applied. We examine the

data using OLS, fixed effects, and a shift-share instrumental variable approach. The

shift-share instrument uses the national inflow of immigrants and the past settlement

from each country of origin to predict the exogenous distribution of immigrants

across Norwegian municipalities. The implementation of this instrument in our

empirical analysis represents our effort to identify the causal effect of changes in the

immigrant population on firm financial performance. Our primary conclusion is that

we do not find evidence that employed immigrants have a negative effect on firm

performance.