 Buying lottery tickets for foreign workers: Lost quota rents induced by H-1B policyJournal of International Economics, 2024, vol. 150, issue C 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. Keywords: Skilled workers; H-1B; Quota rents; Outsourcing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:150:y:2024:i:c:s002219962400059x DOI: 10.1016/j.jinteco.2024.103932 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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