Summary: Fewer H-1B Visas Did Not Mean More Employment for Natives Background In response to concerns that foreign workers, particularly in high-tech fields, were displacing American workers, the U.S. Congress reduced the annual cap on new H-1B visas from 195,000 to 65,000 starting in fiscal year 2004. Study Overview A research team comprising Anna Maria Mayda, Francesc Ortega, Giovanni Peri, Kevin Shih, and Chad Sparber analyzed data from fiscal years 2002-09, including data obtained via the Freedom of Information Act. Their aim was to assess the impact of the lowered H-1B visa cap on employment in various skilled labor sectors. Key Findings Hiring Impact on Native Workers: Despite the reduction in available H-1B visas, firms did not hire more U.S. native workers. This suggests low substitutability between native and H-1B workers with similar skill sets. Effect on H-1B Employment: After the cap reduction, firms hired 20–50% fewer new H-1B workers than they would have otherwise. Changes in Visa Holder Composition: Employment losses from the lower cap clustered at both low and high ends of the wage scale. Consequently, H-1B workers became more concentrated in middle-skilled roles. The cap likely excluded some of the most talented and productive foreign individuals who could have contributed significant technological advancements. Nationality and Field Concentration: There was an increased concentration of India-born workers in computer-related occupations. Indian workers benefited from established labor networks within software and semiconductor industries. Employer Effects: Larger firms with in-house legal expertise were better positioned to secure the limited visas. Smaller firms were disadvantaged, especially during fiscal years 2008-09, when demand exceeded supply, and visas were allocated via a random lottery. Exceptions: The cap only applied to for-profit companies. Educational institutions and nonprofit research organizations were not subject to this limit. Context and Importance The H-1B program, launched in 1990, has been a primary entry point for foreign-born, college-educated professionals into the U.S. labor market. Up to half of the growth in America's college-educated STEM workforce in the following decades is attributable to H-1B workers. The quota reduction's unintended consequence may have been reducing opportunities for highly skilled foreign workers who could have driven innovation in the economy. --- Publication Details Article: "Fewer H-1B Visas Did Not Mean More Employment for Natives" Published: November 30, 2017 Source: NBER Digest (Summary of NBER Working Paper No. 23902) Authors: Anna Maria Mayda, Francesc Ortega, Giovanni Peri, Kevin Shih, Chad Sparber --- Related Topics and Programs Labor Economics International Economics Immigration and Unemployment Innovation and R&D Programs: Labor Studies; Productivity, Innovation, and Entrepreneurship --- Access The full working paper and related resources are available on the National Bureau of Economic Research (NBER) website. --- (Summary by Steve Maas for NBER Digest)