The Effect of the H-1b Quota on Employment and Selection of Foreign-Born Labor

37 Pages Posted: 9 Oct 2017 Last revised: 25 Oct 2017

See all articles by Anna Maria Mayda

Anna Maria Mayda

Georgetown University - Department of Economics; IZA Institute of Labor Economics

Francesc Ortega

City University of New York, CUNY Queens College - Department of Economics ; IZA Institute of Labor Economics

Giovanni Peri

University of California, Davis - Department of Economics

Kevin Shih

Rensselaer Polytechnic Institute (RPI) - Department of Economics

Chad Sparber

Colgate University - Economics Department

Date Written: October 2017

Abstract

The H-1B program allows skilled foreign-born individuals to work in the United States. The annual quota on new H-1B visa issuances fell from 195,000 to 65,000 for employees of most firms in fiscal year 2004. However, this cap did not apply to new employees of colleges, universities, and non-profit research institutions. Additionally, existing H-1B holders seeking to renew their visa were also exempt from the quota. Using a triple difference approach, this paper demonstrates that cap restrictions significantly reduced the employment of new H-1B workers in for-profit firms relative to what would have occurred in an unconstrained environment. Employment of similar native workers in for profit firms did not change, however, consistently with a low degree of substitutability between H1B and native workers. The restriction also redistributed H-1Bs toward computer-related occupations, Indian-born workers, and firms using the H-1B program intensively.

Suggested Citation

Mayda, Anna Maria and Ortega, Francesc and Peri, Giovanni and Shih, Kevin and Sparber, Chad, The Effect of the H-1b Quota on Employment and Selection of Foreign-Born Labor (October 2017). NBER Working Paper No. w23902. Available at SSRN: https://ssrn.com/abstract=3049726

Anna Maria Mayda (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Francesc Ortega

City University of New York, CUNY Queens College - Department of Economics ( email )

65-30 Kissena Blvd
Flushing, NY 11367-1597
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Giovanni Peri

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 Shih

Rensselaer Polytechnic Institute (RPI) - Department of Economics ( email )

110 8th Street
Troy, NY 12180
United States

Chad Sparber

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States

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