Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success

Author: 
Stephen G. Dimmock, Jiekun Huang, and Scott J. Weisbenner
Date of Publication: 
October, 2019
Source Organization: 
Other

Proponents of increased high-skilled immigration in the U.S. often argue these workers help meet a shortage of skilled labor and promote innovation and productivity. Those opposed claim that high-skilled immigrant workers merely displace native-born workers. Despite much debate there is only limited evidence, however, of the impact of high-skilled immigration on companies’ bottom lines. In this study, the authors attempt to address this controversy by looking at data on the impact of H-1B workers on the economic outcomes of startup firms. They choose four years (2008, 2009, 2014 and 2015) where the number of H-1B applications during the filing period exceeded the yearly quota. Such an eventuality triggers the allocation of visas to firms through a random government lottery, creating the environment for a natural experiment. Based on these data, the authors demonstrate that a firm’s rate of success in obtaining visas through the lottery is significantly correlated with improved economic performance across a range of measures, independent of other variables including the nature of the firm or its application characteristics. These measures include a stronger likelihood of receiving venture funding and being funded by a more reputable venture capital firm; of either going public or being acquired; and of demonstrating higher levels of innovation as measured by the number of patents and patent citations. The results of this analysis, the authors argue, demonstrate that foreign high-skilled workers provide these firms with otherwise hard-to-obtain human capital, and that increasing the number of visas for high-skilled workers could have significant economic benefits, for startup firms at least. (Jeffrey Gross)

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Citation: 

Dimmock, S. G., Huang, J., & Weisbenner, S. J. (2019, October). Give me your tired, your poor, your high-skilled labor: h-1b lottery outcomes and entrepreneurial success (NBER Working Paper No. 26392). Retrieved from the National Bureau of Economic Research website: https://www.nber.org/papers/w26392

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