How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program

Britta Glennon

NBER Working Paper No. 27538
Issued in July 2020
NBER Program(s):International Trade and Investment, Labor Studies, Productivity, Innovation, and Entrepreneurship

Skilled immigration restrictions may have secondary consequences that have been largely overlooked in the immigration debate: multinational firms faced with visa constraints have an offshoring option, namely, hiring the labor they need at their foreign affiliates. If multinationals use this option, then restrictive migration policies are unlikely to have the desired effects of increasing employment of natives, but rather have the effect of offshoring jobs. Combining visa data and comprehensive data on US multinational firm activity, I find that restrictions on H-1B immigration caused foreign affiliate employment increases at the intensive and extensive margins, particularly in Canada, India, and China.

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Document Object Identifier (DOI): 10.3386/w27538