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Quotas and Quality: The Effect of H-1B Visa Restrictions on the Pool of Prospective Undergraduate Students from Abroad

In deciding upon whether to pursue an undergraduate education in the United States, a foreign student considers the expected probability of securing US employment after graduation. The H-1B visa provides a primary means of legal employment for college-educated foreign-nationals. In October 2003, the government drastically reduced the number of available H-1B visas, hence lowering a college-educated foreign-born worker’s probability of finding US employment, and possibly discouraging highly qualified international students from attending US colleges and universities. However, citizens from five countries are de facto exempt from the 2003 H-1B visa restrictions. Using students from these five exempt nations as the control group and other international students as the treatment, we study the effects of the 2003 H-1B policy change on the pool of international applicants to US schools. We use two datasets: (i) College Board SAT score data on prospective international applicants; and (ii) SAT and high-school GPA data on international applicants to a single highly-selective university. Our difference-in-difference estimates show that restrictive immigration policy has had an adverse impact on the quality of prospective international applicants, reducing their SAT scores by about 1.5%. This effect is driven mostly by a decline in the number of SAT score reports sent by international students at the top-quintile of the SAT score distribution, suggesting that the restrictive immigration policy disproportionately discourages high-ability international students from pursuing US education. Our results are robust to alternative specifications, including the use of high-school GPA as a measure of applicant ability.

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Paper provided by Department of Economics, Colgate University in its series Working Papers with number 2011-02.

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Date of creation: Jun 2011
Date of revision:
Handle: RePEc:cgt:wpaper:2011-02
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  8. Gauthier-Loiselle, Marjolaine & Hunt, Jennifer, 2009. "How Much Does Immigration Boost Innovation?," CEPR Discussion Papers 7116, C.E.P.R. Discussion Papers.
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  12. Clark, Ximena & Hatton, Timothy J. & Williamson, Jeffrey G., 2004. "Explaining U.S. immigration, 1971-98," Policy Research Working Paper Series 3252, The World Bank.
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  15. Yiu Por Chen, 2005. "Skill-Sorting, Self-Selectivity, and Immigration Policy Regime Change: Two Surveys of Chinese Graduate Students' Intention to Study Abroad," American Economic Review, American Economic Association, vol. 95(2), pages 66-70, May.
  16. Webster, Thomas J., 2001. "A principal component analysis of the U.S. News & World Report tier rankings of colleges and universities," Economics of Education Review, Elsevier, vol. 20(3), pages 235-244, June.
  17. Chellaraj, Gnanaraj & Maskus, Keith E. & Mattoo, Aaditya, 2005. "The contribution of skilled immigration and international graduate students to U.S. innovation," Policy Research Working Paper Series 3588, The World Bank.
  18. Ximena Clark & Timothy J. Hatton & Jeffery G. Williamson, 2002. "Explaining US Immigration 1971-1998," CEPR Discussion Papers 453, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  19. Geiser, Saul & Maria Veronica Santelices, 2007. "Validity Of High-School Grades In Predicting Student Success Beyond The Freshman Year: High-School Record vs. Standardized Tests as Indicators of Four-Year College Outcomes," University of California at Berkeley, Center for Studies in Higher Education qt7306z0zf, Center for Studies in Higher Education, UC Berkeley.
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