The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery

The randomized allocation of H-2B visas to low-income immigrant workers via lottery provides an opportunity to measure the effects of these workers on the employment of U.S.-born workers. This novel survey of a sample of the firms who participated in the 2021 lottery reveals little benefit, and substantial costs, when firms are denied the opportunity to hire immigrant workers. Comparing firms that were able to hire more workers on these visas to those that were not, the authors found that gaining access to immigrant hires raises firm revenues (elasticity with respect to immigrant hires of +0.16) and also modestly raises, rather than lowers, their employment of U.S. workers (elasticity +0.10). This is a “robust result” that holds in several pre-registered subsamples. It is larger at both rural firms (consistent with native labor supply being elastic in such markets) and at firms facing more competition (consistent with research findings that the labor market impact of U.S. immigration is more positive for firms facing more price-elastic output demand). Why are the effects so uniformly positive despite widespread assumptions of harm to natives? The authors suggest that their model and additional evidence suggest that it is because there are simply few substitutes for the labor provided by legally authorized low-skill workers. (The Immigrant Learning Center’s Public Education Institute)

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