The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery

Michael A. Clemens and Ethan G. Lewis

American Economic Journal: Applied Economics, 2026, vol. 18, issue 3, 43-82

Abstract: US firms hiring foreign workers in low-skill nonfarm jobs face a binding quota on the "H-2B" visa, allocated in part through a randomized lottery. We evaluate the quota's marginal impact using the lottery, a novel firm survey, and a pre-analysis plan. Firms exogenously employing more H-2B workers in low-skill jobs increase production (elasticity 0.20–0.22), investment (1.5–2.1), and profits (0.15). The elasticity of substitution between H-2B and US workers is very low (0.8–2.2). Thus, the effect on US employment is zero or positive overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability of black-market labor.

JEL-codes: J15 J24 J46 J61 J82 K37 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/app.20250049

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