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

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  • 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.

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  • 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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    Cited by:

    1. Morgan Raux, 2019. "Looking for the "Best and Brightest": Hiring difficulties and high-skilled foreign workers," Working Papers halshs-02364921, HAL.
    2. Chassamboulli, Andri & Peri, Giovanni, 2020. "The economic effect of immigration policies: analyzing and simulating the U.S. case," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).
    3. Lin, Gary C., 2019. "High-skilled immigration and native task specialization in U.S. cities," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 289-305.
    4. Kahn, Shulamit & MacGarvie, Megan, 2020. "The impact of permanent residency delays for STEM PhDs: Who leaves and why," Research Policy, Elsevier, vol. 49(9).
    5. Bächli, Mirjam & Tsankova, Teodora, 2020. "Free Movement of Workers and Native Demand for Tertiary Education," Other publications TiSEM 33968781-3521-459e-86c9-f, Tilburg University, School of Economics and Management.
    6. Murat Demirci, 2020. "International students and labour market outcomes of US‐born workers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1495-1522, November.
    7. Amuedo-Dorantes, Catalina & Shih, Kevin Y. & Xu, Huanan, 2020. "International Student Enrollments and Selectivity: Evidence from the Optional Practical Training Program," IZA Discussion Papers 13730, Institute of Labor Economics (IZA).
    8. Gouranga Gopal Das & Sugata Marjit, 2018. "Skill, Innovation and Wage Inequality: Can Immigrants be the Trump Card?," CESifo Working Paper Series 7082, CESifo.
    9. Sparber, Chad, 2019. "Substitution between groups of highly-educated, foreign-born, H-1B workers," Labour Economics, Elsevier, vol. 61(C).
    10. Bachli, Mirjam & Tsankova, Teodora, 2020. "Free movement of workers and native demand for tertiary education," CAGE Online Working Paper Series 515, Competitive Advantage in the Global Economy (CAGE).
    11. Sara Signorelli, 2020. "Do Skilled Migrants Compete with Native Workers? Analysis of a Selective Immigration Policy," Working Papers halshs-01983071, HAL.
    12. Sara Signorelli, 2020. "Do Skilled Migrants Compete with Native Workers? Analysis of a Selective Immigration Policy," PSE Working Papers halshs-01983071, HAL.
    13. Sun, Weizeng & Zhang, Sisi & Lin, Chengtao & Zheng, Siqi, 2021. "How do home purchase restrictions affect elite Chinese graduate students’ job search behavior?," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    14. David Escamilla-Guerrero & Moramay Lopez-Alonso, 2020. "Migrant self-selection in the presence of random shocks. Evidence from the Panic of 1907," Oxford Economic and Social History Working Papers _179, University of Oxford, Department of Economics.
    15. Mandal, Biswajit & Chaudhuri, Saswati & Prasad, Alaka Shree, 2020. "Unemployment of Unskilled Labor due to COVID-19 led Restriction on Migration and Trade," GLO Discussion Paper Series 614, Global Labor Organization (GLO).
    16. Bächli, Mirjam & Teodora Tsankova, 2020. "Free Movement of Workers and Native Demand for Tertiary Education," Economics Working Paper Series 2019, University of St. Gallen, School of Economics and Political Science.

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    More about this item

    Keywords

    H-1B; Natural Experiment; Skilled Workers;
    All these keywords.

    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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