Immigrants in Finance: Evidence from Hedge Funds

We examine the value of skilled immigrants in finance by exploiting evidence from visa lotteries. We find that hedge fund management companies that secure more H-1B visas in random lotteries deliver higher alphas, Sharpe ratios, and information ratios. The superior performance of funds with high H-1B visa allocations can be attributed to well-paid and highly educated H-1B workers with quantitative skills. H-1B workers add value by helping hedge funds develop distinctive investment strategies, arbitrage prominent stock anomalies, and overcome capacity constraints. Hedge funds appear to exploit labor market frictions as alpha generation is greatest by workers from countries with the longest wait times for U.S. permanent residency. This paper was accepted by Lukas Schmid, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.07615 .

• 저널Management Science
• 토픽Culture, Economy, and Development Studies · Demography
• DOI10.1287/mnsc.2024.07615
• 저자Jun Chen, Shenje Hshieh, Melvyn Teo, Feng Zhang