Private Strategy, Public Policy

Innovation and Economic Growth

Article Snapshot

Author(s)

William R. Kerr

Source

Science, Vol. 356, No. 6339, p. 695, 2017

Summary

Under the H-1B visa program, firms may hire skilled migrants to work in the United States. Hiring skilled migrants promotes innovation and job growth. However, firms’ motives, such as an interest in hiring workers who will accept lower wages, sometimes distort outcomes under the H-1B visa program.

Policy Relevance

Small changes to the H-1B visa program would increase the program’s benefits.

Main Points

  • In some countries, governments select immigrants by awarding “points,” but these immigrants may struggle with unemployment.
     
  • In the United States, under the H-1B visa program, firms notify the government of skilled immigrants they want to employ, up to a certain number.
     
  • Firms’ motivations affect patterns of skilled immigration and employment.
     
    • Many firms use H-1B visas to hire younger employees, who work longer hours and accept lower wages.
       
    • Hiring young immigrants increases employment for native workers, too, but mostly for younger natives.
       
  • The H-1B visa program must be flexible, to meet employer’s needs, but this flexibility can lead to unintended results; some visas are used by outsourcing companies to move work outside the United States.
     
  • One possible reform would to award H-1B visas in order of the salaries paid, so that the highest-valued slots are filled first.
     
  • The number of visas awarded should vary depending on economic conditions, avoiding rigid quotas established without regard to current needs.
     

 

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