In Short:

The elasticity of substitution between H-2B and U.S. workers is very low (0.8–2.2). Thus the effect on U.S. employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.

Abstract

U.S. firms hiring foreign workers in low-skill nonfarm jobs face a binding quota on the ‘H- 2B’ visa, allocated in part through a randomized lottery. We evaluate the quota’s marginal impact using the lottery, a novel firm survey, and a pre-analysis plan. Firms exogenously employing more H-2B workers in low-skill jobs increase production (elasticity 0.20–0.22), investment (1.5–2.1), and profits (0.15). The elasticity of substitution between H-2B and U.S. workers is very low (0.8–2.2). Thus the effect on U.S. employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.

About the author

Michael Clemens

Professor, School of Government & Policy

Michael Clemens is one of the world’s foremost experts on the economic causes and effects of migration. His research focuses on migration and development, economic growth, aid effectiveness, and economic history, with particular expertise in analyzing how international migration affects people in destination countries, origin countries, and migrants themselves.