The H-1B Visa Crackdown: Winners & Losers in a Global Economy

- My name is Agostina Brinatti. I am at Booth University of Chicago and my research agenda focus on the effect of immigration and international trade. I tried to understand what are the effects of US immigration restrictions on high skilled immigrants in a global economy. This restriction to high skilled immigration in the US have been motivating to protect American wages, but this has been all over the news that immigrants have been going to other and develop economies in particular to Canada because of these restrictions. If these high skilled immigrants are going to other economies, what are the effects of US immigration restrictions in this globalized economy? It's just the US gifting this talent to other economies and helping these economies expand because if so, the US may be giving them a comparative advantage that can ultimately affect American firms and American wages that the policy aim to protect in the first place. So in 2017, there was a sudden policy change that tighten eligibility criteria for college educated immigrants to apply for visa, in particular H one B visa. That basically consisted in policy memorandums that increased the requirements to be eligible to qualify to get a H one bbbs. After this introduction of the policy memorandums, there was an unprecedented spike in the H one B denial rates that went from 6% to 16%, so almost triple, and it was followed for by an unprecedented spike also in high skill immigration to Canada, that approximately 2%. So in this paper, what we do is we show evidence that this high skill immigrant went to Canada. They were a allowed, and they, eh, help Canadian farm to expand in terms of production in the local economy, but also in terms of export to the rest of the world. In terms of the native workers in Canada, more of them were higher because of the additional ance in the economy overall for Canadian workers, we find that they are better off on the US side, what we find is that having these few ants in the economy had distributional consequences. So the policy protected American computer scientists wages, eh, they increase approximately 0.7%, but that was at the expense of the real wages of other Americans, in particular unskilled American workers. And if we put them all together, all American workers together, the effect is relatively small. So that's why in the aggregate there was not much of an effect. It's mainly about the distributional consequences of it. The increase in skill immigrant in the Canadian economy increased production and employment of Canadian native workers, but they were earning lower average wage. When we look into different type of Canadian workers based on their occupation, we find that Canadian computer scientists are soft because they compete directly within company immigrants who are mainly computer scientists, but other Canadian workers are better off. Similarly, we find a mine image in the US American computer scientists are better off by approximately 0.7% in terms of real wage, but that was at the expense of American unskilled workers who are worse off. So overall, the takeaway is that there are winners and losers in both economies. So in this particular case, what we find is that in the Canadian economy is because the sectors are higher, these immigrants in particular high skilled service sectors expand quite a bit and that expansion means that they need to hire more of all workers, for example, and skilled workers. So now we are gonna find that there are more unskilled workers working in the IT sector because the IT sector in Canada is expanding. So hiring computer scientists in a particular sector in Canada, for example, the IT sector can give opportunities or job opportunities to workers in the same sector, but in other occupations doing tasks that the computer scientists may need. So now when you have more immigrant computer scientists, the IT sector expand, need to hire more managers or more janitors or et cetera. And that means that it's gonna increase employment of workers, native workers working in other occupation that compliment this computer scientists. The immigration restriction was imposed to protect American wages of computer scientists and it did, but these restrictions induce skill limit to go to other economies, and these help these economies expand and become more competitive in international markets. This meant that American firms lose competitiveness in the global economy and this was bad or hurts American wages, the policy protected American wages, but not so much because of this extra competition in international markets. Mark.