Recently I reported on a new working paper by Kirk Doran (Notre Dame), Alexander Gelber (UCB) and Adam Isen (U.S. Treasury), that appears to counter work by my UCD colleague Giovanni Peri and his coauthors, as well as by Madeleine Zavodny, a former Fed researcher now at Agnes Scott College. The Peri/Zavodny line of research finds that the hiring of H-1Bs creates lots of new jobs, with the much-cited 2.62 figure being Zavodny’s.
To review, the new work by Doran, Gelber and Isen (DGI) finds that
- “Winning additional H-1B visas has an insignificant effect on patenting within eight years…”
- “H-1Bs substantially crowd out employment of other workers.”
- “We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits….and rules out the scenario in which H-1Bs replace natives one-for-one.”
It would be hard to imagine a paper as diametrically opposed to Peri/Zavodny as this one. And certainly quite timely, as the Peri and Zavodny work has been intensely shopped around to Congress and the press by the industry lobbyists seeking expansion of H-1B.
Yesterday Isen gave a talk in a workshop hosted by Giovanni on our UCD campus, with Isen’s two coauthors present as well. Giovanni presented his work following Isen’s talk. Each side had an hour’s time allotted to them, including questions and comments by the rest of the attendees, which enabled a good thorough exploration of both papers. I had not been aware of the workshop until a couple of days before the event, but fortunately heard of it through the grapevine, and did attend both talks. There were about two dozen people in attendance.
Given the stark challenge that DGI is to Giovanni’s work, he deserves a lot of credit for inviting the authors to speak, and he was a very gracious host. Eventually, though, things did get a little heated, though remaining friendly enough that there were smiles all around by those enjoying watching the clash. I particularly enjoyed the following exchange (as verbatim as my memory allows):
Giovanni, to DGI: Your paper consists of nothing by 0s [i.e. findings that the effect size is 0, e.g. 0 gain in employment]! That can’t be true!
DGI: We did find some nonzero results! We found a triple-star effect [i.e. very highly significant in statistical language] of reduced payroll! [An indication that the H-1Bs may be hired as cheap labor.]
Giovanni: But only in some of the cases!
Interestingly, one of Giovanni’s criticisms of DGI was their data source. DGI looked at H-1Bs hired by lottery late in the season. If I understood Giovanni’s point correctly (he speaks very rapidly, with a heavy Italian accent), it was that each “winning” firm got only about 2 H-1B workers in the process, thus making it hard to judge their impact on the firm. (Some of you may recognize that Josh Stern posted a similar comment to my blog post.) DGI, on the other hand, believe that collectively, across the totality of 3,000+ firms, there should have been an impact, if indeed H-1B has the salutatory effect that Giovanni claims. I may be biased, but I would say that given the 8-year time window DGI used to measure results, their defense seems reasonable.
There were various comments from others in attendance. For instance, Giovanni’s PhD student and coauthor, Kevin Shih, suggested that the reason the DGI analysis didn’t find a positive effect of H-1B on patenting may be because the innovative firms tend to file for H-1Bs earlier in the season. But DGI had found that the later filers actually were more prone to patenting.
I posed a question to Giovanni on a point I’ve brought up here in the blog before: If one accepts the research showing that (a) there is no STEM labor shortage, including in CS, and (b) the quality of the H-1Bs is on average somewhat lower than that of their American peers, how can the H-1Bs have a positive effect on employment numbers, relative to what the hiring of Americans would produce? What magic potion do the H-1Bs possess? He replied that he thinks that it’s good to have as many STEM people in the nation as possible, and that, say, an overqualified Indian PhD H-1B doing ordinary work is good. (He didn’t mention whether it’s good for that Indian PhD H-1B to get the job in lieu of an overqualified American PhD.)
In my earlier blog post on DGI, I had suggested that they might do separate analyses for the ordinary 65,000-visa H-1B category, and the ADE category, which allots 20,000 visas for foreign students earning advanced degrees at U.S. universities. Since that latter type of H-1B is a favorite of the industry, supposedly producing so much innovation, it would be useful for DGI to run separate analyses for ADE.
Actually, they responded to this suggestion. But the results were, borrowing from Giovanni’s phrasing, “More 0s.” In other words, the ADE workers did not increase patenting or employment, etc.
By the Giovanni mentioned, good naturedly but I’m sure correctly, that he gets a lot of hate mail. Someone then asked, “Do you respond?”, to which Giovanni replied, again in a lighthearted tone but probably correctly, “I put them all in a big box.” Some of you may recall that Vivek Wadhwa also complains of getting hate mail. For the record, I should add that sometimes I do too, from H-1Bs. Goes with the territory, I guess.
Bottom line, the two talks were both enlightening, and the exchange quite enjoyable.