Empirical evidence against U.S. H1-B visa restrictions, the case of employment in the manufacturing industry

Abstract This empirical research paper provides ample evidence for policy makers to readdress the immigration policy--especially H1-B visa cap restrictions. The paper is focused on employment shifts and human capital achievement for two groups: the U.S. born and foreign-born working within the United States manufacturing industry. The manufacturing industry is the largest industry employer in the country, and it is in the brink of being at a disadvantage in the global stage due to labor shortage as the workforce ages. The paper uses data for three-year periods--2000, 2010, and 2019--from U.S. Census, The American Community Survey (ACS), Public Use Microdata Sample (PUMS) files, thus providing an overview in labor trends and the human capital needed for the industry to be competitive. The paper builds from the Mincer (1974) earnings function to determine hourly wages for the two groups and then uses the Oaxaca-Blinder (1973) method to measure potential bias between the U.S. born and foreign-born employees in the manufacturing industry. The results in this paper align with other recent research findings (Gest et al., 2021; Eckstein & Peri, 2018) that show immigration as a tool to economic competitiveness. The data trends and findings in this paper synchronize with Borjas and Edo (2021) insights indicating that the native-born may respond to supply shocks of immigration by moving to other labor markets that are not directly affected by immigration.