Study: Losing the H-2B Visa Lottery Shrinks Firms, Doesn't Create US Jobs
An AEA paper using a randomized visa lottery finds that firms denied foreign seasonal workers don't hire more Americans — they just get smaller.
What to know
- Study uses the randomized H-2B visa lottery as a natural experiment across 472 surveyed firms, mimicking a clinical trial design with a pre-registered analysis plan.
- Firms that lost the lottery did not substitute in more US workers — they simply shrank in revenue and investment, while winning firms grew.
- The estimated elasticity of substitution between H-2B and US workers (0.8–2.2) is far below the 4–10 range found in comparable studies, suggesting low-skill foreign and domestic workers are weak substitutes.
- HN discussion largely engages the econometrics (elasticities, capital-labor ratios, the meaning of 'low-skill') rather than disputing the paper's headline finding, with one thread questioning whether market competition among firms undercuts the study's interpretation.
The dispute Whether the study's null effect on US employment reflects genuine low substitutability between foreign and domestic workers, or is instead an artifact of market competition that the researchers didn't fully account for. · positions read across 14 posts and comments
The study's econometric details (elasticities, capital-labor substitution, terminology) deserve closer scrutiny before drawing policy conclusions.
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“I feel like the wording "low-skill" has become a technical term that doesn't mean what the word says and it makes people make assumptions they shouldn't with…”
collabs · Hacker News ↗
The finding that losing firms don't hire more Americans may be explained by market competition from lottery-winning firms, not lack of substitution.
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“The firms who do not win the visa lottery "just become smaller firms" instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate…”
fwlr · Hacker News ↗
Aggregate studies like this don't address individual cases of Americans displaced by visa-holding workers, and facts alone rarely change minds in a polarized debate.
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“I guarantee there are specific people who've been indisputably replaced by H1Bs, maybe clustered in specific reasons, and maybe specific fields. Telling these people …”
armchairhacker · Hacker News ↗
Michael A. Clemens Study co-author, economistEthan G. Lewis Study co-author, economistUS Department of Labor Agency administering the H-2B visa lottery
How it unfolded 3 developments, newest first · click a bar or a number to jump articlespostscomments
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Commenters dig into the study's substitution elasticity findings
HN commenters parse the paper's estimate that H-2B and US workers are poor substitutes (elasticity 0.8–2.2, versus 4–10 in comparable studies), and debate whether 'low-skill' is a misleading technical term and whether the reported capital investment gains reflect capital-labor substitution.
“I feel like the wording "low-skill" has become a technical term that doesn't mean what the word says and it makes people make assumptions they shouldn't with…”
— collabs, HN commenter · source -
O
# USA immigration, the real deal The evidence indicates a marginal increase in H-2B visas would expand production, investment, and profits at US firms without reducing USAian employment. The authors caution their short-run estimates may even understate the gains: chronic visa uncertainty makes firms underinvest, and related work (Census Bureau…
2 more of the top 3 · 11 posts in this stretch
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> 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…
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> 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.The "investment in equipment…
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Commenter questions whether the study accounts for market competition
An HN commenter argues that lottery-losing firms can't just hire market-rate US labor because they must still compete against lottery-winning firms with access to below-market-rate foreign labor, asking whether the economists addressed this dynamic.
“The firms who do not win the visa lottery "just become smaller firms" instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate labor.”
— fwlr -
> "When policy is politically polarized, you need more facts," he said.Mmmm... It seems in the world of politics, esp. populist politics, more facts don't bring better policies. They are simply ignored, or accused of being lies pushed by the ennemies.> "We have all the facts on this we need. We don't need any more facts. In the land of truth, my…
2 more of the top 3 · 3 posts in this stretch
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Winning the Visa Lottery L: https://www. aeaweb.org/research/immigratio n-restrictions-firms-workers C: https:// news.ycombinator.com/item?id=4 9782775 posted on 2026.09.20 at 23:37:02 (c=0, p=3)
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The firms who do not win the visa lottery “just become smaller firms” instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate labor.Did the economists who ran this study miss this? Do they explain it?
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AEA paper shows H-2B lottery losers shrink instead of hiring Americans
A study published in the American Economic Journal: Applied Economics, using the randomized H-2B visa lottery as a natural experiment across 472 surveyed firms, finds that losing the lottery cut a firm's foreign hiring roughly in half without increasing native low-skill employment; winning firms saw revenue and investment rise.
“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 w…”
— Ethan G. Lewis -
1 outlet Winning the Visa Lottery
first by HN Frontpage, 5d ago
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What people are saying 8 voices from 1 site · best of 14 · verbatim
- Did the economists address the possibility that non-winning firms can't compete on labor cost against lottery-winning firms?
- Would firms still prefer capital investment over hiring US labor even without visa restrictions?
- Sep 21
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From all I know, a firm bringing H-2B (farm labor) to an actual farm is what an H-1B bodyshop to a software development shop: it does not produce any farmed goods and its customers are farmers, who don't have legal departments. It's a middle man. A surprising finding would have been if such a firm started to hire Americans all of sudden: how would…
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Sometimes they are lies. Governments including Western ones have lied before (e.g. Tuskegee Syphillis), and academics have published flawed, misleading, or straight-up fabricated studies (e.g. “landmark” Alzheimer’s study).But more often, the “fact” does not address the individual’s issues, and the individual may give a stupid counterargument…
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Pure luck of the draw. Knew a dev who got it, and it completely changed his career trajectory – pretty wild.
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I'm still hung up on how the $100K requirement for H1B visas is extended to Sep '27. The US has always been, is and will likely continue to be a magnet for the brightest out there to come and work. Why hamper it?
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My friend was saying that we just need to show people the facts to change their minds. I showed him a pile of scientific studies indicating that it doesn't work. His response was "I still think it'll work"!
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> 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…
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The lottery is what makes this unusually interesting. A lot of immigration/labor studies get stuck on the obvious selection problem: firms that hire immigrant workers are probably different from firms that don't in a dozen other ways.
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Finally a The Thick of It reference in HN.An AUS Utopia reference would probably be more fitting though.