Understanding the Economic Impact of the H-1B Program on the U.S.

Within the context of our model, it is possible to understand the effect that the availabil- ity of high-skill foreign workers has on the earnings of both high and low-skill workers, the goods available in the economy, and profits in the high-tech sector of the economy. [...] 4 1 The Market for Computer Scientists in the 1990s 1.1 The Information Technology Boom of the Late 1990s The mid 1990s marks the beginning of the use of the Internet for commercial purposes in the United States, and a concomitant jump in the number of Internet users. [...] Figure 1e shows the growth in the number of H-1 visas (the H-1 was the precursor to the H-1B) issued 1976-2008, estimates of the stock of H-1 visas in the economy each year, and the changes in the H-1B visa cap.7 Through the decade of the 1990s, foreign workers with H-1B visas became an important source of labor for the technology sector. [...] We use the share of exports in IT to US GDP and the relative size of the US economy to the rest of the world to pin down this parameter. [...] To calibrate the value of β, the technological spillover from total CS in the IT sector, we look at the relationship between the price decline in IT and the increase in total CS working in the sector.