Understanding the Economic Impact of the H-1B Program on the U.S.
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.
We would like to acknowledge the Alfred P. Sloan Foundation for generous research support. We thank Breno Braga, Gordon Hanson, Minjoon Lee, Rishi Sharma, Sebastian Sotelo, Sarah Turner and seminar participants at the NBER Global Talent SI Conference, University of California – San Diego, University of California – Davis and the University of Michigan for insightful comments and NE Barr for editorial assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.