The Effects of High-Skilled Immigration on Firms: Evidence from H-1B Visa Lotteries

We study the effect of a firm winning an additional H-1B visa on the firm’s outcomes, by comparing winning and losing firms in the Fiscal Year 2006 and 2007 H-1B visa lotteries. We match administrative data on the participants in these lotteries to the universe of approved U.S. patents, and to IRS data on the universe of U.S. firms. Winning additional H-1B visas has an insignificant effect on patenting within eight years, with confidence intervals that rule out moderate-sized or larger effects. H-1Bs substantially crowd out employment of other workers. We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits. 1 This is a greatly revised version of NBER Working Paper 20668, previously titled “The Effect of HighSkilled Immigration on Patenting and Employment: Evidence from H-1B Visa Lotteries.” We thank U.S. Customs and Immigration Services for help with the H-1B lottery data. We thank Sunil Vidhani for outstanding research assistance. We thank Notre Dame and the Wharton School of the University of Pennsylvania for research support. We are grateful to George Borjas, John Bound, David Card, Hilary Hoynes, Larry Katz, Bill Kerr, Ankur Patel, and Sean Farhang for helpful comments, and to Lee Fleming for sharing the patent data with us. We thank Danny Yagan for sharing his code to probabilistically identify natives and foreigners in the Treasury data. The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the U.S. Treasury Department, or of any other person associated with the U.S. Treasury Department. All errors are our own.