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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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    File URL: https://www.piie.com/publications/working-papers/2026/effect-low-skill-immigration-restrictions-us-firms-and-workers
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    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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