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The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery

Author

Listed:
  • Michael A. Clemens
  • Ethan G. Lewis

Abstract

US firms hiring foreign workers in low-skill nonfarm jobs face a binding quota on the "H-2B" visa, allocated in part through a randomized lottery. We evaluate the quota's marginal impact using the lottery, a novel firm survey, and a pre-analysis plan. Firms exogenously employing more H-2B workers in low-skill jobs increase production (elasticity 0.20–0.22), investment (1.5–2.1), and profits (0.15). The elasticity of substitution between H-2B and US workers is very low (0.8–2.2). Thus, the effect on US employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.

Suggested Citation

  • Michael A. Clemens & Ethan G. Lewis, 2026. "The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery," American Economic Journal: Applied Economics, American Economic Association, vol. 18(3), pages 43-82, July.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:3:p:43-82
    DOI: 10.1257/app.20250049
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    More about this item

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • K37 - Law and Economics - - Other Substantive Areas of Law - - - Immigration Law

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