US immigration policy and brain waste
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US immigration policy and brain waste Ayoung Kim1 · Brigitte S. Waldorf2 · Natasha T. Duncan3 Received: 26 July 2019 / Accepted: 23 August 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The US H-1B visa for highly skilled immigrant labor and the accompanying H-4 visa for their dependents lead to structural constraints that exclude dependents from the labor force. This paper investigates the economic consequences of the US immigration policy that decouples work and admission permission for H-4 visa holders. Using a pool of likely H-1B recipients who were recruited through firms’ job offers, we find that—despite labor force restrictions—the vast majority of married H-1B recipients are accompanied by their spouses. This is particularly the case for male H-1B recipients, making wives rather than husbands carry most of the burden associated labor force exclusions. Using a matched sample of married immigrants with work authorization, we estimate labor force participation probabilities and wages for the pool of likely dependent spouses if they were not facing work restrictions. We find that the policy-imposed labor force exclusion of H-4 spouses leads to substantial losses of spouses’ earnings of about (2014) US$28,000 per capita, which—in the aggregate—implies a sizeable productivity loss for the US due to its restrictive US immigration policy. JEL Classification J61 · J68
1 Introduction Attracting high-skilled immigrants via skill-based selection is a pivotal part of immigration policy in many developed countries (Sana 2010; Duncan 2012), with the associated human capital gain expected to be beneficial for the host country’s
* Ayoung Kim [email protected] 1
Department of Agricultural Economics, Mississippi State University, 255 Tracy Drive, Mississippi State, MS 39762, USA
2
Department of Agricultural Economics, Purdue University, 403 West State Street, West Lafayette, IN 47907, USA
3
Honors College, Purdue University, 1100 Third Street, West Lafayette, IN 47907, USA
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economy (Drinkwater et al. 2007; Bound et al. 2017a, b). Indeed, a working visa program on the business side is an essential source of high-skilled labor supply for technology companies in many developed countries, especially in the US. Following recent suggestions of restricting H1-B visas in the US, many technology firms, including leading global companies, expect to be directly and negatively affected because they utilize the working immigrant program to transfer highly talented workers from outside the US.1 The extent of the immigration induced human capital gains depend on a number of factors, many of which are influenced by immigration policies. Aydemir (2011), for example, showed that Canada’s skill-based selection—the so-called point system—generates a more favorable human capital inflow than other systems such as family reunification systems. Some of the immigration induced human capital gains may be underutilized due to immigrant skills’ imperfect transferab
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