Researchers have found that high-skill immigrants complement native labor, but the effects of low-skill immigration are less clear. In a paper published in the American Economic Journal: Applied Economics, authors Michael A. Clemens and Ethan G. Lewis analyzed the economic effects of low-skill immigration using a randomized lottery for H-2B visas, which authorize temporary foreign workers for seasonal jobs in the U.S. such as landscaping, seafood processing, forestry, and hospitality. Ninety-eight percent of these jobs do not require a high school education.
The Immigration Act of 1990 set the H-2B visa cap at 66,000 per year, a figure that has not changed despite increasing demand. In the second half of 2022, employers requested 136,555 workers for only 33,000 available visa slots. Following a surge of petitions that crashed a Department of Labor (DOL) server in 2019, the DOL began processing petitions in a randomized order, which allowed researchers to build a dataset by surveying 472 businesses that entered the 2021 and 2022 lotteries.
The study found that losing out on the lottery reduced a firm's employment of H-2B workers by about half. Firms that won the lottery and hired all the foreign workers they requested experienced a revenue increase with an elasticity of approximately 0.20, indicating that a doubling of H-2B employment raised revenue by about 20%. Investment in equipment and structures showed an even stronger response, with an elasticity ranging from 1.5 to 2.1.
Importantly, the study noted that employment of low-skill American workers at firms that lost the lottery did not increase. Overall, the effect of foreign hiring on U.S. employment was either zero or positive, with a significant positive effect observed in rural firms, where an increase in H-2B workers correlated with a rise in U.S. workers.
Clemens stated, "If you don't allow firms to hire immigrant workers, they just become smaller firms. They are not replaced with U.S. workers. Instead, the output of the firm shrinks, and there are fewer total workers." The research suggests that low-skill foreign and American workers are not effective substitutes for each other. The elasticity of substitution between H-2B and U.S. workers was estimated at 0.8 to 2.2, which is significantly lower than findings from other studies that typically report an elasticity of 4 to 10.
The study highlights the impact of a visa cap that has not been updated in decades, indicating that an increase in H-2B visas could enhance production, investment, and profits at American firms without negatively affecting American employment. The authors also noted that their short-run estimates might understate the benefits, as firms facing uncertainty about visa availability tend to underinvest. Clemens emphasized the importance of factual evidence in politically polarized policy discussions, stating, "When policy is politically polarized, you need more facts. That's precisely when you need some kind of common reference point of facts, and that's where economic science has its greatest role."
The paper titled “The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery” is set to be published in the July 2026 issue of the American Economic Journal: Applied Economics.