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

46 Pages Posted: 25 Feb 2018

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

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Abstract

The H-1B program allows skilled foreign-born individuals to work in the United States. The annual quota on new H-1B issuances fell from 195,000 to 65,000 for employees of most firms in fiscal year 2004. This cap did not apply to new employees of colleges, universities, and non-profit research institutions. 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 natives in for-profit firms did not change, consistent with a low degree of substitutability between H-1B and native workers. The restriction also redistributed H-1Bs toward computer-related occupations, Indian-born workers, and firms using the H-1B program intensively.

Keywords: skilled workers, H-1B, natural experiment

JEL Classification: J61, F22, F22, O33, R10

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 the Employment and Selection of Foreign-Born Labor. IZA Discussion Paper No. 11345. Available at SSRN: https://ssrn.com/abstract=3129289

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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