H-1B Visa Program, Visa Cap and Foreign Worker Earnings

Using various years of data from the National Survey of College Survey we examine the earnings of work visa immigrants who entered the U.S. during the various H-1B cap periods and whether the cap was binding or not at the time of their entry. For work visa entrants in the non-academic sector as well as from cap bound countries, we find that earning premium relative to college graduate natives ranges between 17%-25% if the immigrants entered the U.S. during the initial period of H-1B and during the later binding cap periods. This premium is lost if immigrants first entered on H-1B during the non-binding period. Compared to pre 1990 work immigrants we find there is a drop in earnings for immigrants who entered on H-1B during the non binding period. This is not seen in the academic sector and for five cap exempt countries, where cap is not relevant. Our findings are driven by the H-1B program involving staffing agencies hiring of low ability workers and workers facing wage suppression with limited job mobility. Work visa entrants may also face scarring in the labor market because of lack of U.S. education experience. We do not find this drop in earning for student visa entrants who are admitted by the university selection process.