H-1B Visa Restrictions Lead to Job Offshoring

A recent working paper published by the National Bureau of Economic Research finds that protectionist restrictions on skilled immigrants, such as caps limiting the number of available H-1B visas annually, results in companies offshoring jobs to affiliates located in countries with more liberal policies towards global talent.

Though H-1B caps are couched in terms of protecting jobs of U.S. workers, the paper’s author cautioned that

any policies that are motivated by concerns about the loss of native jobs should consider that policies aimed at reducing immigration have the unintended consequence of encouraging firms to offshore jobs abroad.

In short, restrictive H-1B policies could not only be exporting more jobs and businesses to countries like Canada, but they also could be causing the U.S.’s innovative capacity to fall behind.

Recent trends in the increase in the number of noncitizens emigrating from the U.S. to Canada for work, and the growth in international students choosing to study in Canada, a country that has streamlined the path from higher education to work to permanent residency, indicate that the U.S. restrictions on skilled immigration may well be paying off for our northern neighbor, likely to the U.S.’s detriment.

You can find the NBER working paper here.