Understanding the Economic Impact of the H-1B Program on the U.S.

66 Pages Posted: 9 Dec 2016 Last revised: 15 Feb 2017

John Bound

University of Michigan; National Bureau of Economic Research (NBER)

Gaurav Khanna

University of Michigan at Ann Arbor - Department of Economics

Nicolas Morales

University of Michigan at Ann Arbor, Students

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Date Written: October 15, 2016

Abstract

Over the 1990s, the share of foreigners entering the US high-skill workforce grew rapidly. This migration potentially had a significant effect on US workers, consumers and firms. To study these effects, we construct a general equilibrium model of the US economy and calibrate it using data from 1994 to 2001. Built into the model are positive effects high skilled immigrants have on innovation. Counterfactual simulations based on our model suggest that immigration increased the overall welfare of US natives, and had significant distributional consequences. In the absence of immigration, wages for US computer scientists would have been 2.6% to 5.1% higher and employment in computer science for US workers would have been 6.1% to 10.8% higher in 2001. On the other hand, complements in production benefited substantially from immigration, and immigration also lowered prices and raised the output of IT goods by between 1.9% and 2.5%, thus benefiting consumers. Finally, firms in the IT sector also earned substantially higher profits due to immigration

Keywords: High-skill immigration, H-1Bs, Information Technology

JEL Classification: J23, J24, J61

Suggested Citation

Bound, John and Khanna, Gaurav and Morales, Nicolas, Understanding the Economic Impact of the H-1B Program on the U.S. (October 15, 2016). Sloan Foundation Economics Research Paper No. 2883348. Available at SSRN: https://ssrn.com/abstract=2883348

John Bound (Contact Author)

National Bureau of Economic Research (NBER)

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University of Michigan ( email )

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Gaurav Khanna

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Nicolas Morales

University of Michigan at Ann Arbor, Students ( email )

Ann Arbor, MI
United States

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