Critics of U.S. high-skilled guest worker visa programs argue that 1) program regulations tie workers to their sponsoring firm, creating working conditions akin to indentured servitude and that 2) the programs lack a vehicle for adjusting downward the number of visas available during a recession. We address these two criticisms using unique payroll data from firms that rely upon these programs. Contrary to popular belief, we find that the guest workers in our sample exhibit a significant amount of inter-firm mobility that varies over both the earnings distribution and the business cycle. This suggests that, despite regulatory frictions of the visa programs, competitive pressures are a driving force in this labor market. Furthermore, we find evidence of increased return migration during periods of high unemployment. This is especially true for lower paid workers, suggesting positive selection.
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Organizational sponsors of guest workers to the United States claim foreign‐born workers enhance productivity and innovation. Drawing upon a unique dataset of all organizational sponsors of guest workers in the United States from 1993 to 2008, we find a 10% increase in guest worker sponsorship is associated with a 2.2–3.1% increase in patenting within firms. Furthermore, we examine how organizational industry and country of origin are associated with the effects of guest worker sponsorship on organization‐level measures of innovation and productivity. Despite an overall within‐firm positive association between sponsorship and patenting, higher percentages of a firm's workers on visas are associated with lower patenting, but higher labor productivity. Firm‐level industry and country of origin heterogeneity is significantly related to the relationship between guest work sponsorship and both patent‐related and nonpatent investment in innovation such as research and development (R&D) expenditures. Semiconductor firms and universities spend more on R&D in conjunction with guest worker sponsorship, while semiconductor companies and hardware companies patent less. We discuss theoretical and human resource implications, and offer suggestions for future research.
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