Research Highlights Article
August 13, 2026
Winning the visa lottery
Evidence from a US government lottery shows that restricting foreign low-skill workers shrinks businesses without creating jobs for Americans.
Source: Ragesoss, CC BY-SA 3.0
Researchers broadly agree that high-skill immigrants complement native labor. But for low-skill work, the evidence has been less clear, with estimates swinging widely depending on the assumptions made.
In a paper in the American Economic Journal: Applied Economics, authors Michael A. Clemens and Ethan G. Lewis studied the economic effects of low-skill immigration by exploiting a randomized lottery for visas run by the federal government.
In the United States, the H-2B visa authorizes temporary foreign workers in seasonal jobs, such as landscaping, seafood processing, forestry, and hospitality. Ninety-eight percent of these jobs require no high school education.
The Immigration Act of 1990 capped the number of H-2B visas at 66,000 per year. Clemens traced the origin of that figure through a chain of former congressional staffers to a subcommittee chairman who recalled that the law’s designers had simply tripled the roughly 22,000 visas issued the previous year and assumed the ceiling of 66,000 would never bind. But 36 years later, the cap falls far short of the demand. For the second half of 2022, employers requested 136,555 workers for just 33,000 visa slots.
H-2B visa petitions across the country
The chart below shows the counties where cap-subject petitions were certified by the Department of Labor for 2021 and 2022. There were certified petitions from all 50 states plus the District of Columbia and Puerto Rico.
After a surge of petitions crashed a Department of Labor (DOL) server in 2019, the agency began processing employers' petitions in randomized order, assigning each a letter. The DOL begins processing the A petitions first, proceeding to B, C, D, etc., in order. Firms drawing an A are highly likely to hire nearly all the workers they request, while firms drawing later letters are not.
The authors built a dataset by surveying 472 businesses that entered the 2021 and 2022 lotteries. They registered a pre-analysis plan specifying their hypotheses and methods before any responses arrived, a safeguard that prevents researchers from inadvertently selecting congenial results. The logic of their design mirrored a clinical trial.
"You need to imagine what would have happened to these firms in the other world where they didn't get immigrants," Clemens told the AEA in an interview. "And a lottery is one of the clearest windows into that other world we have."
The consequences were significant. Losing out on the lottery cut a firm's employment of H-2B workers roughly in half. Firms that won and could hire all the foreign workers they sought saw revenue rise with an elasticity of approximately 0.20, meaning a doubling of H-2B employment raised revenue by about a fifth. Investment in equipment, vehicles, and structures responded even more strongly, with an elasticity of 1.5 to 2.1.
Equally striking is what did not happen. Employment of low-skill American workers at losing firms did not increase. Across all firms the effect of foreign hiring on US employment was zero or positive, and in a prespecified subsample of rural firms it was significantly positive, with an elasticity of 0.61, meaning that for every one percent increase in H-2B workers there was just over half a percent increase in US workers.
"If you don't allow firms to hire immigrant workers, they just become smaller firms," Lewis said. "They are not replaced with US workers. Instead, the output of the firm shrinks, and there are fewer total workers."
The results suggest that low-skill foreign and low-skill American workers are poor substitutes for one another. The authors' estimates put the elasticity of substitution between H-2B and US workers at roughly 0.8 to 2.2, far below related studies of immigrants in low-skill work, which typically find an elasticity of 4 to 10, and nowhere near the perfect substitutability assumed in some influential studies.
If you don't allow firms to hire immigrant workers, they just become smaller firms. They are not replaced with US workers. Instead, the output of the firm shrinks, and there are fewer total workers.
Ethan Lewis
The reason turns on a distinction between two forces: substitution and scale. At a fixed level of output, some American workers do step into jobs left open by foreign workers, but firms that are denied workers do not hold output fixed. A traveling carnival visits fewer cities, and a fishing operation covers less of the salmon season, with the result that the business as a whole contracts. This scale effect swamps the substitution effect, leaving fewer jobs for everyone, Americans included.
The findings speak directly to a cap that has not been revised in decades. The evidence indicates that a marginal increase in H-2B visas would expand production, investment, and profits at American firms without reducing American employment.
The authors caution that their short-run estimates may even understate the benefits since firms facing chronic uncertainty about visas underinvest, and related work finds that losing firms are more likely to shut down entirely. For Clemens, the study reflects a conviction about the role of economics in political debates.
"When policy is politically polarized, you need more facts," he said. "That's precisely when you need some kind of common reference point of facts, and that's where economic science has its greatest role."
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“The Effect of Low-Skill Immigration Restrictions on US Firms and Workers: Evidence from a Randomized Lottery” appears in the July 2026 issue of the American Economic Journal: Applied Economics.