{"title":"Buying lottery tickets for foreign workers: Lost quota rents induced by H-1B policy","authors":"Rishi R. Sharma, Chad Sparber","doi":"10.1016/j.jinteco.2024.103932","DOIUrl":null,"url":null,"abstract":"<div><p>The H-1B program allows firms in the United States to temporarily hire high-skilled foreign citizens. The government restricts inflows of new H-1B workers and therefore creates potential rents typical of a quota. Importantly, however, the US allocates H-1B status by random lottery. We develop a theoretical model demonstrating that this lottery creates a negative externality that destroys quota rents by incentivizing firms to search for more workers than can actually be hired. Some firms specialize in hiring foreign labor and contracting out those workers’ services to third-party sites. These outsourcing firms exacerbate the search externality. Numerical exercises suggest that these processes result in an annual economic loss exceeding $10,000 per new H-1B worker hired relative to what would occur in the absence of lottery allocation.</p></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"150 ","pages":"Article 103932"},"PeriodicalIF":3.8000,"publicationDate":"2024-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S002219962400059X/pdfft?md5=01891354068b9aa5d81c7e080f3f6135&pid=1-s2.0-S002219962400059X-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S002219962400059X","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
The H-1B program allows firms in the United States to temporarily hire high-skilled foreign citizens. The government restricts inflows of new H-1B workers and therefore creates potential rents typical of a quota. Importantly, however, the US allocates H-1B status by random lottery. We develop a theoretical model demonstrating that this lottery creates a negative externality that destroys quota rents by incentivizing firms to search for more workers than can actually be hired. Some firms specialize in hiring foreign labor and contracting out those workers’ services to third-party sites. These outsourcing firms exacerbate the search externality. Numerical exercises suggest that these processes result in an annual economic loss exceeding $10,000 per new H-1B worker hired relative to what would occur in the absence of lottery allocation.
H-1B 计划允许美国公司临时雇用高技能外国公民。政府限制 H-1B 新员工的流入,因此产生了典型的配额潜在租金。但重要的是,美国通过随机抽签的方式分配 H-1B 身份。我们建立了一个理论模型,证明这种抽签会产生负外部性,激励企业寻找比实际可雇用人数更多的工人,从而破坏配额租金。一些企业专门雇用外国劳动力,并将这些工人的服务外包给第三方网站。这些外包企业加剧了搜寻外部性。数值计算表明,与没有抽签分配的情况相比,这些过程会导致每雇佣一名新的 H-1B 工人,每年的经济损失超过 10,000 美元。
期刊介绍:
The Journal of International Economics is intended to serve as the primary outlet for theoretical and empirical research in all areas of international economics. These include, but are not limited to the following: trade patterns, commercial policy; international institutions; exchange rates; open economy macroeconomics; international finance; international factor mobility. The Journal especially encourages the submission of articles which are empirical in nature, or deal with issues of open economy macroeconomics and international finance. Theoretical work submitted to the Journal should be original in its motivation or modelling structure. Empirical analysis should be based on a theoretical framework, and should be capable of replication.