RIEB Discussion Paper Series No.2024-01

Title

Does the Restriction Policy of High-skill Immigrants Benefit Native Workers?

Abstract

To protect native workers, discussions on immigration restrictions have emerged. However, limited studies have analyzed the economic impact of such restrictions on native workers. Past literature demonstrated a small effect of immigration restrictions on the labor outcomes of native workers, attributing it to capital substitution. Notably, this analysis focused on restrictions on low-skilled immigrants. Past literature of theoretical analysis highlighted that labor scarcity affects labor outcomes differently based on the substitutability of labor and capital. Anticipating a distinct impact, this paper examined the restriction of skilled immigrants exploiting the H-1B visa restrictions after 2004. The analysis, using triple differences estimation, revealed a significantly positive impact on labor outcomes of natives. Additionally, the visa restrictions positively impacted capital accumulation. These results suggest that the shortage of skilled labor supply induced capital accumulation. Nevertheless, capital investment could not fully adjust to the lack of labor supply, resulting in improved labor outcomes for natives.

Keywords

Immigration; Labor economics; Labor policy; Technological change

JEL Classification

J15, J18, J22, J31, J44, J61, O33

Inquiries

Takuma SUGIYAMA
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059
Graduate School of Economics, Osaka University