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The effect of low-skill immigration restrictions on US firms and workers: Evidence from a randomized lottery

Author

Listed:
  • Michael A. Clemens

    (Peterson Institute for International Economics)

  • Ethan G. Lewis

    (Dartmouth College)

Abstract

This paper studies the economic effects of US restrictions on the employment of foreign workers in low-skill, nonfarm jobs through the H-2B visa. Leading industries that hire H-2B workers include groundskeeping, hospitality, construction, forestry, and seafood packing. US employers' access to this visa is limited by a federal government quota and allocated in part via a randomized lottery. The authors find that firms that can employ more H-2B workers in low-skill jobs due to the lottery increase their production, investment, and profits. The effect of H-2B hiring on US employment is zero or positive overall, and positive in rural areas, because the elasticity of substitution between H-2B and US workers is very low (0.8-2.0) and dominated by scale effects. Forensic analysis suggests extremely low substitutability with black-market labor.

Suggested Citation

  • Michael A. Clemens & Ethan G. Lewis, 2026. "The effect of low-skill immigration restrictions on US firms and workers: Evidence from a randomized lottery," Working Paper Series WP26-11, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp26-11
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    Cited by:

    1. Duha T. Altindag & John M. Nunley & R. Alan Seals, 2026. "Mobile Foreigners: Mortgage Lock-In and H-1B Demand," Papers 2605.28904, arXiv.org.
    2. Thiemo Fetzer & Christina Palmou & Jakob Schneebacher, 2024. "How Do Firms Cope with Economic Shocks in Real Time?," ECONtribute Discussion Papers Series 337, University of Bonn and University of Cologne, Germany.
    3. Jeremias Nieminen & Sanni Kiviholma & Ohto Kanninen & Hannu Karhunen, 2024. "Regulating Labor Immigration: The Effects of Lifting Labor Market Testing," Working Papers 344, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    4. Silliman, Mikko & Willén, Alexander, 2024. "Worker Power, Immigrant Sorting, and Firm Dynamics," Discussion Paper Series in Economics 13/2024, Norwegian School of Economics, Department of Economics.
    5. Hernandez, Manuel & Gan, Li & Zhang, Yike, 2026. "When Border Enforcement Formalize Labor: Evidence from Texas's Operation Lone Star," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404371, Agricultural and Applied Economics Association.
    6. Christian Dustmann & Uta Schoenberg, 2025. "Linking Empirical Evidence to Theory: A Framework for Understanding Immigrations Labor Market Effects," RFBerlin Discussion Paper Series 2522, ROCKWOOL Foundation Berlin (RFBerlin).
    7. Fizza Jabbar & Joel Kariel & Jakob Schneebacher, 2025. "How do commuters adapt to local pollution pricing?," IFS Working Papers W25/57, Institute for Fiscal Studies.
    8. Catalina Amuedo-Dorantes & Esther Arenas-Arroyo & Parag Mahajan & Bernhard Schmidpeter, 2023. "Low-wage jobs, foreign-born workers, and firm performance," Economics working papers 2023-10, Department of Economics, Johannes Kepler University Linz, Austria.
    9. David Autor & David Dorn & Gordon Hanson, 2025. "Trading Places: Mobility Responses of Native- and Foreign-Born Adults to the China Trade Shock," ILR Review, Cornell University, ILR School, vol. 78(1), pages 10-36, January.
    10. Pia M. Orrenius & Madeline Zavodny, 2025. "Temporary Fixes, Permanent Problems: Implications of the Growing Reliance on Liminal Status in U.S. Immigration Policy," Southern Economic Journal, John Wiley & Sons, vol. 92(2), pages 181-193, October.

    More about this item

    Keywords

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    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
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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