How is the H-1B Quota Impacting Immigration?

January 22, 2019

The H-1B visa program is a well-known, popular way for companies to fill skill-shortage positions in the United States with foreign labor. The program, which has been around since the early 1990s, has had dramatically different “caps” on the number of visas allowed in a given year since its inception. These caps have ranged from 65,000 in the early years to a peak of 195,000 in the early 2000s, before going back down to 65,000 in 2004.

But what have the implications of these different caps been? How has changing the number of visas accepted impacted the immigration process? A group of economic researchers from the IZA Institute of Labor Economics attempted to discern the impact of the 2004 drop in the visa quota. They determined that the drop had caused a significant decrease in employment for H-1B workers at for-profit firms, compared to what was projected to happen in a more uncontrolled environment. In this sense, the quota program was a success in reducing the demand for H-1B visas.

The researchers also found that the lower quota increased the emphasis on Indian-born workers, as well as computer-related/IT workers, and limited the companies to ones that used H-1B workers extensively rather than those who were just “filling gaps”. One of the important implications was that much of the restriction of workers coming in was at the highest and lowest wage ranges, suggesting that incredibly highly qualified, and highly compensated, workers opted from immigrating to the United States all together because of the increased restrictions.

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Citation: Mayda, A. M., Ortega, F., Peri, G., Shih, K., & Sparber, C. (2018). The effect of the H-1B quota on the employment and selection of foreign-born labor. European Economic Review, 108, 105–128.

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