NBER Working Paper Finds H-1B Immigration Raised Incomes for Natives and Existing Immigrants
Key Takeaways
- •The paper studies the economic effects of H-1B immigration on industries that use H-1B workers and on their trading partners.
- •The authors use the 1999–2003 temporary increase in the H-1B cap to identify the effects of exposure.
- •H-1B exposure is associated with higher incomes for both native-born workers and pre-existing immigrants.
- •The income gains are concentrated in non-STEM occupations and flow mainly to downstream industries.
- •The study finds no direct effect on patenting, suggesting the gains came from improved productivity rather than invention.
A new NBER working paper by Ran Abramitzky, Leah Platt Boustan, Ahmet Gulek, and Jens Hainmueller examines the economic effects of H-1B immigration on U.S. industries that employ H-1B workers and their trading partners.
The H-1B visa program allows U.S. employers to temporarily employ foreign workers in specialty occupations, typically requiring at least a bachelor's degree. The program has been subject to an annual numerical cap since its creation under the Immigration Act of 1990. Between 1999 and 2003, the cap was temporarily raised to 195,000 per fiscal year under legislation including the American Competitiveness in the Twenty-First Century Act of 2000. That expansion period coincided with the dot-com boom, when demand for skilled technology workers was at a peak. Today, the statutory cap stands at 65,000 per fiscal year, with an additional 20,000 available under the advanced degree exemption established by the H-1B Visa Reform Act of 2004.
Using a novel cross-industry design and the 1999–2003 expansion of the H-1B visa cap for identification, the authors find that H-1B exposure raised incomes for both natives and pre-existing immigrants, with gains concentrated in non-STEM occupations. The concentration of gains outside STEM suggests complementarity between H-1B workers and native-born workers in roles that benefit indirectly from the expanded skilled labor pool. According to the paper, income gains propagate forward through supply chains to downstream industries but not backward to upstream industries — a pattern consistent with a productivity shock rather than a labor supply shock.
The authors also report no direct effect on patenting, suggesting that productivity gains arise from improved task execution rather than from patentable invention.
The findings contribute to a broader academic literature on high-skilled immigration and labor market outcomes, including prior work by some of the same authors on long-run immigrant assimilation. The paper has not yet been peer-reviewed; NBER working papers are circulated for discussion and may be revised.
The working paper is available via the National Bureau of Economic Research. Author profiles: Ran Abramitzky, Leah Platt Boustan, Ahmet Gulek, Jens Hainmueller.
