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The Effect of the H-1B Quota on the Employment and Selection of Foreign-Born Labor

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Listed:
  • Mayda, Anna Maria
  • Ortega, Francesc
  • Peri, Giovanni
  • Shih, Kevin
  • Sparber, Chad

Abstract

The H-1B program allows skilled foreign-born individuals to work in the United States. The annual quota on new H-1B issuances fell from 195,000 to 65,000 for employees of most firms in fiscal year 2004. This cap did not apply to new employees of colleges, universities, and non-profit research institutions. Existing H-1B holders seeking to renew their visa were also exempt from the quota. Using a triple difference approach, this paper demonstrates that cap restrictions significantly reduced the employment of new H-1B workers in for-profit firms relative to what would have occurred in an unconstrained environment. Employment of similar natives in for-profit firms did not change, consistent with a low degree of substitutability between H-1B and native workers. The restriction also redistributed H-1Bs toward computer-related occupations, Indian-born workers, and firms using the H-1B program intensively.

Suggested Citation

  • Mayda, Anna Maria & Ortega, Francesc & Peri, Giovanni & Shih, Kevin & Sparber, Chad, 2018. "The Effect of the H-1B Quota on the Employment and Selection of Foreign-Born Labor," CEPR Discussion Papers 12736, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12736
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    Keywords

    H-1B; Natural Experiment; Skilled Workers;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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