Senior fellow Michael Clemens' quoted in Bloomberg Businessweek article on visas.
The demand for H-1B visas to work in the U.S. is so high that last month, for the third time, the federal government announced it would use a lottery to distribute them.
To economists, a lottery is evidence of a problem: Something is preventing supply and demand from coming into balance. In this case, that “something” is the annual cap of 65,000 on H-1B visas, which are awarded to foreign workers with theoretical or technical expertise in specialized fields, including scientists, engineers, and programmers. And, oddly, fashion models. (Another 20,000 visas are available to workers with a master’s degree or higher.)
The latest quarterly issue of the American Economic Review, one of the top U.S. economics journals, contains an article arguing that H-1B visas benefit not only those who receive them, but also the companies that hire the visa holders. The journal was published online for subscribers this week. The article’s title: “Why Do Programmers Earn More in Houston than Hyderabad? Evidence from Randomized Processing of US Visas.”
Indian programmers who won H-1B visas the last two times lotteries were conducted, in 2007 and 2008, earned five times as much as those who got stuck back home—around $65,000 a year vs. around $12,000 a year—according to the article. Why didn’t U.S. employers try to save money by having the programming done in India, where it’s cheaper? Because there are important, if hard-to-measure, advantages of having programmers in the U.S. Such advantages perhaps include “the productivity effects of face-to-face interaction,” wrote the article’s author, Michael Clemens, a senior fellow at the Center for Global Development in Washington.