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The H-1B Wage Gap, Visa Fees, and Employer Demand

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  • George Borjas

Abstract

The H-1B program lets firms hire high-skill foreign workers for a six-year term. The annual number of visas allocated to for-profit firms is capped at 85,000 and there is excess demand for those visas. The analysis merges administrative data, including the I-129 petitions that report the wage offer made to specific H-1B beneficiaries, with the American Community Surveys. On average, H-1B workers earn 15 percent less than comparable natives, suggesting that firms may be willing to pay a one-time fee to obtain the visas. The data are examined using a labor demand model to simulate how a fee alters the hiring decision. For moderate levels of excess demand, the revenue maximizing fee ranges from $97,000 to $154,000 after allowing for unobserved productivity gains or costs associated with an H-1B hire, and for wage growth and job turnover in the H-1B workforce. The fee also changes the skill composition of that workforce, making it more skilled.

Suggested Citation

  • George Borjas, 2026. "The H-1B Wage Gap, Visa Fees, and Employer Demand," RFBerlin Discussion Paper Series 26087, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26087
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other

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