Winning the Visa Lottery

Research Highlights Article

August 13, 2026

Evidence from a US authorities lottery shows that restricting abroad low-skill workers shrinks businesses without creating jobs for Americans.

Researchers broadly concur that high-skill immigrants complement native labor. But for low-skill work, the evidence has been small clear, alongside estimates swinging extensively depending on the assumptions made.

In a paper in the American Economic Journal: Applied Economics, authors Michael A. Clemens and Ethan G. Lewis studied the financial effects of low-skill immigration by exploiting a randomized lottery for visas run by the national government.

In the United States, the H-2B visa authorizes impermanent abroad workers in seasonal jobs, specified as landscaping, seafood processing, forestry, and hospitality. Ninety-eight percent of these jobs necessitate no elevated academy education. 

The Immigration Act of 1990 capped the figure of H-2B visas at 66,000 per year. Clemens traced the base of that fig through a sequence of erstwhile legislative staffers to a subcommittee chairman who recalled that the law’s designers had merely tripled the approximately 22,000 visas issued the former twelvemonth and assumed the ceiling of 66,000 would never bind. But 36 years later, the cap falls far abbreviated of the demand. For the second fractional of 2022, employers requested 136,555 workers for fair 33,000 visa slots.

After a surge of petitions wrecked a Department of Labor (DOL) server in 2019, the agency began handling employers' petitions in randomized order, assigning all a letter. The DOL starts handling the A petitions first, hearing to B, C, D, etc., in order. Firms example an A are extremely apt to employ nearly all the workers they request, during firms example afterward alphabet are not. 

The authors built a dataset by surveying 472 businesses that entered the 2021 and 2022 lotteries. They registered a pre-analysis scheme specifying their hypotheses and methods before any responses arrived, a safeguard that prevents researchers from inadvertently selecting congenial results. The logic of their scheme mirrored a medicinal trial. 

"You need to ideate what would have happened to these firms in the another earth anywhere they didn't get immigrants," Clemens told the AEA in an interview. "And a lottery is among the clearest windows into that another earth we have."

The consequences were significant. Losing out on the lottery cut a firm's occupation of H-2B workers approximately in half. Firms that won and could employ all the abroad workers they sought saw income increase alongside an elasticity of about 0.20, definition a doubling of H-2B occupation raised income by concerning a fifth. Investment in equipment, vehicles, and structures responded equal additional strongly, alongside an elasticity of 1.5 to 2.1. 

Equally striking is what did not happen. Employment of low-skill American workers at losing firms did not increase. Across all firms the consequence of abroad hiring on US occupation was zero or positive, and in a prespecified subsample of agrarian firms it was considerably positive, alongside an elasticity of 0.61, definition that for all one percent addition in H-2B workers there was fair complete fractional a percent addition in US workers. 

"If you don't authorize firms to employ immigrant workers, they fair rotate into smaller firms," Lewis said. "They are not replaced alongside US workers. Instead, the output of the resolute shrinks, and there are small total workers."

The results propose that low-skill abroad and low-skill American workers are mediocre substitutes for one another. The authors' estimates put the elasticity of substitution between H-2B and US workers at approximately 0.8 to 2.2, far below connected studies of immigrants in low-skill work, which typically discover an elasticity of 4 to 10, and nowhere near the ideal substitutability assumed in several influential studies.

If you don't authorize firms to employ immigrant workers, they fair rotate into smaller firms. They are not replaced alongside US workers. Instead, the output of the resolute shrinks, and there are small total workers.

Ethan Lewis  

The logic turns on a difference between two forces: substitution and scale. At a fixed flat of output, several American workers do stage into jobs remaining open by abroad workers, but firms that are denied workers do not clasp output fixed. A traveling carnival visits small cities, and a fishing procedure covers small of the salmon season, alongside the outcome that the endeavor as a entire contracts. This measure consequence swamps the substitution effect, leaving small jobs for everyone, Americans included.

The findings conversation immediately to a cap that has not been revised in decades. The evidence indicates that a marginal addition in H-2B visas would develop production, investment, and profits at American firms without reducing American employment. 

The authors alert that their short-run estimates may equal understate the benefits since firms facing chronic doubt concerning visas underinvest, and related work finds that losing firms are additional apt to close downward entirely. For Clemens, the study reflects a condemnation concerning the function of economics in governmental debates. 

"When guideline is politically polarized, you need additional facts," he said. "That's exactly whenever you need several benevolent of average citation item of facts, and that's anywhere financial discipline has its top role."

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“The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery” appears in the July 2026 matter of the American Economic Journal: Applied Economics.