Does the Restriction Policy of High-skill Immigrants Benefit Native Workers?

Takuma Sugiyama

No DP2024-01, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: To protect native workers, discussions on immigration restrictions have emerged. However, limited studies have analyzed the economic impact of such restrictions on native workers. Past literature demonstrated a small effect of immigration restrictions on the labor outcomes of native workers, attributing it to capital substitution. Notably, this analysis focused on restrictions on low-skilled immigrants. Past literature of theoretical analysis highlighted that labor scarcity affects labor outcomes differently based on the substitutability of labor and capital. Anticipating a distinct impact, this paper examined the restriction of skilled immigrants exploiting the H-1B visa restrictions after 2004. The analysis, using triple differences estimation, revealed a significantly positive impact on labor outcomes of natives. Additionally, the visa restrictions positively impacted capital accumulation. These results suggest that the shortage of skilled labor supply induced capital accumulation. Nevertheless, capital investment could not fully adjust to the lack of labor supply, resulting in improved labor outcomes for natives.

Keywords: Immigration; Labor economics; Labor policy; Technological change (search for similar items in EconPapers)
JEL-codes: J15 J18 J22 J31 J44 J61 O33 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2024-02
New Economics Papers: this item is included in nep-int, nep-mig and nep-ure
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