Working Paper: NBER ID: w30589
Authors: Michael A. Clemens; Ethan G. Lewis
Abstract: U.S. firms face a binding quota on visas to employ foreign workers in low-skill occupations outside of agriculture. The government allocates this quota to firms in part through a randomized lottery. We evaluate the marginal impact of the quota on firms entering this lottery in 2021 and 2022, using a novel survey and pre-analysis plan. Firms exogenously authorized to employ more immigrants in low-skill jobs significantly increase production (elasticity 0.20–0.22), investment (1.5–2.1), and the rate of profit (0.15). Because the foreign-native elasticity of substitution in production is very low in the policy-relevant occupations (0.8–2.2), the effect on native employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.
Keywords: lowskill immigration; H2B visa; firm production; employment elasticity; randomized lottery
JEL Codes: D22; F22; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exogenous permission to hire immigrants (K37) | increase in production (E23) |
| exogenous permission to hire immigrants (K37) | increase in investment (E22) |
| lowskill immigration restrictions (K37) | decrease in revenue (H27) |
| lowskill immigration restrictions (K37) | decrease in investment (E22) |
| lowskill immigration restrictions (K37) | no increase or decrease in employment of lowskill native workers (J69) |
| lowskill immigration restrictions (K37) | limited substitutability between lowskill foreign and native workers (F66) |
| treatment effect on revenue (C22) | larger for small firms facing high competition (L25) |
| effect on employment (F66) | more pronounced in rural areas (R19) |