Private strategy, public policy.

Abstract

Firms, by design, are the central actors in the U.S. high-skilled immigration system. Whereas “points-based systems,” in which governments select migrants on the basis of their curricula vitae, can struggle with underemployment of migrants ([ 1 ][1]), the U.S. system delegates selection to firms, roughly saying: “Tell us whom you want to employ, and we will admit them up to a limit and subject to basic conditions.” Motivations of firms thus become motivations of the immigration system. But despite potential advantages, policy implementation is crude: The H-1B visa is basically first-come, first-served and uses a lottery in years with very high demand, like 2017. Thus, each visa is a random selection of potential firm motivations, only partly aligned with national intentions and that creates unanticipated winners and losers in how the impact of migration is felt among U.S. citizens. Firms can hire migrants to be more innovative, unlock growth of jobs and profits, and benefit citizens ([ 2 ][2], [ 3 ][3]), but many employers use visas to keep their workforces younger, lowering wage costs and perhaps garnering employees more willing to work longer hours. Our study of 319 of America's largest employers and technology firms found that expansion of young, skilled immigrant employment led to more jobs for natives, but these mainly went to younger workers ([ 4 ][4]). Similarly, the H-1B system is very flexible and helps ensure that migrants are chosen to fit the current needs of employers. For example, the share of visas going to computer-related occupations has fluctuated 25 to 75% over 5-year time spans, depending on economic conditions ([ 3 ][3]). However, this flexibility also allows visas to be used in ways that the program did not intend, such as roughly a quarter of visas being claimed by Indian outsourcing companies to aid moving work away from the United States. Ultimately, high-skilled migration is not a zero-sum game, as the productivity of skilled workers in many industries is enhanced by proximity and collaboration with other skilled workers. One promising refinement is to award H-1B visas in order of the salaries to be paid, which could help ensure that higher-value-added applicants are selected and weaken any potential undercutting of American workers. This would need to ensure equal footing for small firms and an appropriate balance over occupations and industries. Innovative approaches need to be considered for determining the number of visas, such as an index to economic conditions, such that we are not locked into fixed quota levels that can span a decade without connection to current needs. 1. [↵][5]1. S. P. Kerr, 2. W. Kerr, 3. C. Ozden, 4. C. Parsons , J. Econ. Perspect. 30, 83 (2016). [OpenUrl][6] 2. [↵][7]1. W. Kerr, 2. W. Lincoln , J. Labor Econ. 28, 473 (2010). [OpenUrl][8][CrossRef][9][Web of Science][10] 3. [↵][11]1. W. Kerr, 2. J. Lerner, 3. S. Stern 1. S. P. Kerr, 2. W. Kerr, 3. W. Lincoln , Innovation Policy and the Economy, W. Kerr, J. Lerner, S. Stern, Eds. (Univ. of Chicago Press, 2015), vol. 15, pp. 115–152. [OpenUrl][12] 4. [↵][13]1. S. P. Kerr, 2. W. Kerr, 3. W. Lincoln , J. Labor Econ. 33 (suppl. 1), S147 (2015). [OpenUrl][14] [1]: #ref-1 [2]: #ref-2 [3]: #ref-3 [4]: #ref-4 [5]: #xref-ref-1-1 View reference 1 in text [6]: {openurl}?query=rft.jtitle%253DJ.%2BEcon.%2BPerspect.%26rft.volume%253D30%26rft.spage%253D83%26rft.genre%253Darticle%26rft_val_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Ajournal%26ctx_ver%253DZ39.88-2004%26url_ver%253DZ39.88-2004%26url_ctx_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Actx [7]: #xref-ref-2-1 View reference 2 in text [8]: {openurl}?query=rft.jtitle%253DJ.%2BLabor%2BEcon.%26rft.volume%253D28%26rft.spage%253D473%26rft_id%253Dinfo%253Adoi%252F10.1086%252F651934%26rft.genre%253Darticle%26rft_val_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Ajournal%26ctx_ver%253DZ39.88-2004%26url_ver%253DZ39.88-2004%26url_ctx_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Actx [9]: /lookup/external-ref?access_num=10.1086/651934&link_type=DOI [10]: /lookup/external-ref?access_num=000279608400001&link_type=ISI [11]: #xref-ref-3-1 View reference 3 in text [12]: {openurl}?query=rft.jtitle%253DInnovation%2BPolicy%2Band%2Bthe%2BEconomy%26rft.volume%253D15%26rft.spage%253D115%26rft.genre%253Darticle%26rft_val_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Ajournal%26ctx_ver%253DZ39.88-2004%26url_ver%253DZ39.88-2004%26url_ctx_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Actx [13]: #xref-ref-4-1 View reference 4 in text [14]: {openurl}?query=rft.jtitle%253DJ.%2BLabor%2BEcon.%26rft.volume%253D33%26rft.spage%253DS147%26rft.genre%253Darticle%26rft_val_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Ajournal%26ctx_ver%253DZ39.88-2004%26url_ver%253DZ39.88-2004%26url_ctx_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Actx