shows placing restrictions on H-1B visas backfires and causes U.S. companies to hire more talent in other countries. The study comes at a time when two U.S. senators have reintroduced legislation that, if enacted, would likely result in more jobs leaving the United States.
“This paper combines visa microdata and comprehensive data on U.S. multinational firm activity to demonstrate that firms respond to restrictions on H-1B immigration by increasing foreign affiliate employment at the intensive and extensive margins, particularly in China, India and Canada,” according toby Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania.
Glennon found companies active in international markets are the most likely to offshore jobs in response to H-1B visa restrictions. “The most globalized multinational companies are the most likely to respond to these restrictions by offshoring, highlighting that firm capabilities—in the form of prior internationalization—shape the decision and ability to offshore in response to skilled immigration restrictions; indeed, these firms hire 0.9 employees abroad for every visa rejection.
The updated research takes a closer look at the most globalized multinational companies. “When U.S. firms are denied H-1Bs, they go abroad, setting up new foreign affiliates and hiring talent there instead of in the U.S.,” said Glennon in an interview. “For the most global multinational companies, this is at almost a 1:1 rate. The results demonstrate an important unintended consequence of immigration restrictions: the movement of jobs and talent abroad, with major implications for U.S.
This will have a long-term effect on the economy...