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Winning the Visa Lottery
Anna Maria Mayda discusses how the skill level of foreign workers influences native voters in the United States.
Nearly two centuries of data show that immigrants commit fewer crimes than US-born citizens.
Researchers broadly agree that high-skill immigrants complement native labor. But for low-skill work, the evidence has been less clear, with estimates swinging widely depending on the assumptions made.
In a paper in the American Economic Journal: Applied Economics, authors Michael A. Clemens and Ethan G. Lewis studied the economic effects of low-skill immigration by exploiting a randomized lottery for visas run by the federal government.
In the United States, the H-2B visa authorizes temporary foreign workers in seasonal jobs, such as landscaping, seafood processing, forestry, and hospitality. Ninety-eight percent of these jobs require no high school education.
The Immigration Act of 1990 capped the number of H-2B visas at 66,000 per year. Clemens traced the origin of that figure through a chain of former congressional staffers to a subcommittee chairman who recalled that the law’s designers had simply tripled the roughly 22,000 visas issued the previous year and assumed the ceiling of 66,000 would never bind. But 36 years later, the cap falls far short of the demand. For the second half of 2022, employers requested 136,555 workers for just 33,000 visa slots.
After a surge of petitions crashed a Department of Labor (DOL) server in 2019, the agency began processing employers' petitions in randomized order, assigning each a letter. The DOL begins processing the A petitions first, proceeding to B, C, D, etc., in order. Firms drawing an A are highly likely to hire nearly all the workers they request, while firms drawing later letters are not.
The authors built a dataset by surveying 472 businesses that entered the 2021 and 2022 lotteries. They registered a pre-analysis plan specifying their hypotheses and methods before any responses arrived, a safeguard that prevents researchers from inadvertently selecting congenial results. The logic of their design mirrored a clinical trial.
"You need to imagine what would have happened to these firms in the other world where they didn't get immigrants," Clemens told the AEA in an interview. "And a lottery is one of the clearest windows into that other world we have."
The consequences were significant. Losing out on the lottery cut a firm's employment of H-2B workers roughly in half. Firms that won and could hire all the foreign workers they sought saw revenue rise with an elasticity of approximately 0.20, meaning a doubling of H-2B employment raised revenue by about a fifth. Investment in equipment, vehicles, and structures responded even more strongly, with an elasticity of 1.5 to 2.1.