Foreign and Native Skilled Workers: What Can We Learn from H-1b Lotteries?

49 Pages Posted: 18 May 2015 Last revised: 30 May 2015

See all articles by Giovanni Peri

Giovanni Peri

University of California, Davis - Department of Economics

Kevin Yang Shih

Rensselaer Polytechnic Institute (RPI)

Chad Sparber

Colgate University - Economics Department

Date Written: May 2015

Abstract

In April of 2007 and 2008, the U.S. randomly allocated 65,000 H-1B temporary work permits to foreign-born skilled workers. About 88,000 requests for computer-related H-1B permits were declined in each of those two years. This paper exploits random H-1B variation across U.S. cities to analyze how these supply shocks affected labor market outcomes for computer-related workers. We find that negative H-1B supply shocks are robustly associated with declines in foreign-born computer-related employment, while native-born computer employment either falls or remains constant. Most of the correlation between H-1B supply shocks and foreign employment is due to rationing that varies with a city's initial dependence upon H-1B workers. Variation in random, lottery-driven, unexpected shocks is too small to identify significant effects on foreign employment in the full sample of cities. However, we do find that random rationing affects foreign employment in cities that are highly dependent upon the H-1B program. Altogether, the results support the existence of complementarities between native and foreign-born H-1B computer workers.

Suggested Citation

Peri, Giovanni and Shih, Kevin Yang and Sparber, Chad, Foreign and Native Skilled Workers: What Can We Learn from H-1b Lotteries? (May 2015). NBER Working Paper No. w21175. Available at SSRN: https://ssrn.com/abstract=2607364

Giovanni Peri (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

Kevin Yang Shih

Rensselaer Polytechnic Institute (RPI) ( email )

Troy, NY 12180
United States

Chad Sparber

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States

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