Skilled Immigration and Firm-Level Innovation: The U.S. H-1B Lottery

Andy Wu, Harvard Business School

Abstract: The growth of the global technology industry drives the migration of skilled labor towards countries like the United States that can utilize it, but the U.S. limits the immigration of skilled workers that are employed domestically by U.S. firms. Proponents argue that skilled immigration allows firms to access technical skills that unavailable domestically and promote innovation, but there is little evidence of whether this firm-level effect exists. We evaluate the impact of skilled immigration on innovation in U.S. firms by exploiting a random lottery in the H-1B visa program, which allows us to estimate precise causal effects of marginal skilled immigration on firm-level innovation as measured by patenting productivity. Our set of empirical models compare firms that applied for the same number of lottery-subject immigrants but won different numbers of immigrants because of the lottery. Our results suggest that winning an H-1B immigrant does not significantly increase patent applications or grants at the firm level. Consistent with our main empirical findings, further analysis of the composition of participating immigrants and employers suggests that the current utilization of the H-1B program is not conducive to generating firm-level innovation; we find pervasive use of the program in industries, occupations, and firms where patenting is low.

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