The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery
U.S. firms face a binding quota on visas to employ foreign workers in low-skill occupations outside of agriculture. The government allocates this quota to firms in part through a randomized lottery. We evaluate the marginal impact of the quota on firms entering this lottery in 2021 and 2022, using a novel survey and pre-analysis plan. Firms exogenously authorized to employ more immigrants in low-skill jobs significantly increase production (elasticity 0.20–0.22), investment (1.5–2.1), and the rate of profit (0.15). Because the foreign-native elasticity of substitution in production is very low in the policy-relevant occupations (0.8–2.2), the effect on native employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.
Non-Technical Summaries
- The US has long limited admission of contract foreign laborers for low-skill work in order to avoid adversely affecting US workers....
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