H-1B visa restrictions push jobs out of US: Wharton study

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The countries likely to benefit most from H-1B restrictions are Canada, India and China.

As the debate on H-1B visas and its impact on the American workforce continue to be the headline on most immigration platforms, an important new study sheds light on how restrictions on high-skilled immigration can affect off-shoring. The study, conducted this month by  at University of Pennsylvania, analyses if the high-skilled immigration in the US, really displaces native workers and drives down wages.

For long, critics of the H-1B visa program have maintained that high-skilled immigration leads to locals losing jobs. On the other hand, its supporters argue that immigration strengthens the innovation culture in America. The purpose of the study was to look at a secondary but crucial aspect of the debate — whether visa restrictions are leading to offshoring.

Glennon found that multinational firms faced with decreased access to visas for skilled workers, have an offshoring option, namely, hiring the foreign labor they need at their foreign affiliates.

The study identifies that the H-1B rejection rate has more than tripled ever since President Trump’s “Buy American, Hire American” policy came into effect in early 2017.

The study is unprecedented in many ways, as even though immigration has been a subject of wide discussion, the multinationals using the option of offshoring in response to visa restrictions has not been sufficiently identified.

Glennon found that, on an average, 0.3 jobs were offshored for every unfilled H-1B position. The study also revealed that the expansion of foreign affiliate employment has been concentrated in three countries: China, India and Canada. The study effectively counters the argument that high-skilled immigration takes away the jobs from native born workers.

One of the other findings of the study was that, if more high-skilled professionals are pushed out of the country, it leads to a shortage of innovation in the country.

The report says that skilled immigration has outsized impacts on innovation in the home country through spill overs. She underlines “In short, restrictive H-1B policies could not only be exporting more jobs and businesses to countries like Canada, but they also could be making the U.S.’s innovative capacity fall behind,” it says.

In effect, the new research establishes that policies aimed at reducing immigration have the unintended consequence of encouraging firms to offshore jobs abroad.”

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