Right here we examine the financial results of a large-scale experiment in the US: nationwide, firm-level, pure randomization of restrictions on the employment of immigrants for low-skill jobs. The US has one principal work visa for low-skill labor within the nonfarm financial system— the H-2B visa. U.S. employers’ entry to that visa is proscribed by a quota and allotted partially by way of a randomized lottery carried out by the federal authorities. This exogenous variation in restrictions on immigrant employment permits unusually clear, policy-relevant estimates of how U.S. companies and staff modify. After publicly committing to our speculation checks and predicted therapy results with a pre-analysis plan, we collected information from each winners and losers of the 2021 H-2B visa lottery in a novel agency survey. This enables prespecified checks of primary theoretical predictions concerning the magnitude and hetergeneity of the impact of low-skill immigration restrictions. It moreover permits estimation of the firm-level, immigrant-native “mixed” elasticity of substitution (Hicks 1936).
We discover that exogenous permission to make use of immigrants for low-skill work causes the marginal agency to develop manufacturing. Put in a different way, exogenous restrictions on using the profit-maximizing variety of immigrants for low-skill work trigger the marginal agency to contract. These restrictions trigger a big and statistically important lower in income and funding. The restrictions trigger no enhance, or a lower, within the employment of low-skill native staff and the speed of revenue. Dropping the lottery reduces companies’ employment of low-skill immigrants by 56%. This lower causes companies to contract, lowering operations with an elasticity of +0.164 for income and +1.03 for funding (statistically distinguishable from zero at standard ranges), and with an elasticity of +0.102 for low-skill U.S. employment, and +0.100 for the revenue price (statistically indistinguishable from zero at standard ranges).
That is from Michael A. Clemens & Ethan G. Lewis, “The Impact of Low-Ability Immigration Restrictions on US Corporations and Employees: Proof from a Randomized Lottery,” NBER Working Paper #30589, October 22, 2022.
The methodology is kind of intelligent. As a result of the fortunate employers are chosen by lottery, there’s no choice bias. That signifies that Clemens and Lewis can take a look at adjustments in employment of employers that received the lottery and adjustments in employment of employers that misplaced.
The authors put it extra succinctly of their summary:
Corporations exogenously licensed to make use of extra immigrants considerably enhance manufacturing (elasticity +0.16) with no lower or a rise in U.S. employment (elasticity +0.10, statistically imprecise) throughout a number of pre-registered subsamples. The outcomes suggest very low substitutability of native for overseas labor within the policy-relevant occupations.
Briefly, low-skilled People should not shedding their jobs to low-skilled immigrants.
HT2 Tyler Cowen.
