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Outsourcing and Skill Imports: Foreign High-Skilled Workers on H-1B and L-1 Visas in the United States


  • Jacob Funk Kirkegaard

    () (Peterson Institute for International Economics)


This working paper looks in detail at the H-1B and L-1 visa programs for temporary employment in the United States. Based on official data from the US Citizenship and Immigration Services and the US Department of State, H-1B and L-1 visa issuance rapidly increased in the late 1990s, followed by a marked slowdown after 2001. This points to the highly cyclical nature of both visa programs. Indian nationals and immigrants working in computer-related occupations dominate the H1-B and L-1 population in the United States, but these two groups are also found to be the most cyclical segment, with very large declines in inflows after 2001. The total population of H-1B visaholders in 2003 is estimated to range between 387,000 and 746,000, of which 160,000 to 306,000 were Indian nationals. As all data on H-1B/L-1 visaholders are gross numbers and gross jobs data for comparable categories are absent, the extent of the impact of these visa programs on the US labor market cannot be gauged precisely. A broad range of US industries and educational institutions are found to be employing H-1B recipients, with the IT industry being the dominant sector. Evidence of aggressive wage-cost cutting, including paying H-1B recipients only the legally mandated 95 percent of the prevailing US wage, is found among some H-1B employers, although no systematic abuse of the system is present.

Suggested Citation

  • Jacob Funk Kirkegaard, 2005. "Outsourcing and Skill Imports: Foreign High-Skilled Workers on H-1B and L-1 Visas in the United States," Working Paper Series WP05-15, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp05-15

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    References listed on IDEAS

    1. Catherine L. Mann & Jacob Funk Kirkegaard, 2006. "Accelerating the Globalization of America: The Role for Information Technology," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3900.
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    Cited by:

    1. Sari Pekkala Kerr & William R. Kerr & William F. Lincoln, 2015. "Firms and the Economics of Skilled Immigration," Innovation Policy and the Economy, University of Chicago Press, vol. 15(1), pages 115-152.
    2. John Bound & Gaurav Khanna & Nicolas Morales, 2017. "Understanding the Economic Impact of the H-1B Program on the US," NBER Chapters,in: High-Skilled Migration to the United States and its Economic Consequences National Bureau of Economic Research, Inc.
    3. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, July.
    4. Ashish Arora & Lee G. Branstetter & Matej Drev, 2013. "Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 757-775, July.
    5. Jacob Funk Kirkegaard, 2015. "The Economic Scope and Future of US-India Labor Migration Issues," Working Paper Series WP15-1, Peterson Institute for International Economics.
    6. William R. Cline, 2015. "The Financial Sector and Growth in Emerging Asian Economies," Working Paper Series WP15-5, Peterson Institute for International Economics.
    7. William R. Kerr & William F. Lincoln & Prachi Mishra, 2014. "The Dynamics of Firm Lobbying," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 343-379, November.
    8. Jacob Funk Kirkegaard, 2007. "Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia," Working Paper Series WP07-2, Peterson Institute for International Economics.

    More about this item


    Outsourcing; offshoring; high-skilled labor; immigration; H1B/L-1 visas;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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