The federal government has long allowed American companies to offer temporary employment to highly skilled foreign workers through its controversial H-1B visa program. Proponents believe the program gives firms a competitive edge in pursuit of innovation, while critics contend it pushes aside American workers in favor of immigrants. The H1-B Reform Act of 2004 capped the number of visas available and prompted other changes.
Wharton Assistant Professor of Management Britta Glennon used data from that policy change to examine how the restrictions affect offshoring, which is the practice of hiring foreign labor through foreign offices. Glennon’s forthcoming paper is titled “How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program.”
According to Glennis, “when we talk about skilled immigration in the media or even in the broader academic literature, people tend to focus on the impact on the wages or the jobs of American workers ... Does skilled immigration take American jobs, or does it improve innovation?
“U.S. multinational firms have this alternative choice. If they can’t get the skilled immigrants that they want in the U.S., they can just hire them abroad at one of their foreign affiliates. If it’s true that they are just going to hire skilled immigrants elsewhere, then those policies restricting them can backfire.”
Read more at Knowledge@Wharton.