“As we find that foreign experts actually increase firm-specific wages, it is a strong indication that these experts also affect the underlying productivity of the firms,” the authors write.
The average wage levels in these firms “increase significantly by 2.4 percent in the third year following the employment of a foreign expert,” the authors write. The percentage of medium-skilled workers declines as the share of higher-skilled workers increases, reflecting a fundamental shift in the composition of a firm’s workforce. Overall, employment tends to decrease and sales to increase after firms hire a foreign expert, a combination of effects that also suggests productivity is boosted.
A major reason firms may benefit from hiring foreign workers is their special knowledge about international markets. This is confirmed in the study, which found that the hiring of foreign experts raises the probability that a firm will begin to export goods or services in the year following the hiring by 2.7 percentage points. For those firms that are already in the export market, the level and intensity of exporting activities increases by about 1.5 percent in each of the three years following a foreign expert’s arrival.
Hiring even a limited number of foreign experts may have a significant impact on the productivity and profitability of a firm. Given their special knowledge of foreign markets, these highly skilled employees also lead their companies to export more.