“Winning the (H-1B) Lottery: Effects of High-Skilled Workers on Firm Production and Employment”
Policies that expand access to scarce skilled workers may change not only how many workers firms employ, but also whom they employ and what they produce. I study these responses using random selection in the FY 2021–2024 H-1B lotteries among nursing home employers, linking lottery records to daily occupation-level payroll data and Medicare claims. Immediately following lottery news—roughly six months before a prospective H-1B worker can legally begin employment—total employment falls by 7 full-time equivalent workers, concentrated among lower-skilled nurses. Concurrently, patient volume falls by 5.8 percent, concentrated among lower-complexity patients. After the earliest start date, higher-complexity stays increase, while lower-skilled staffing and lower-complexity admissions remain below baseline. A model featuring a capacity-constrained, multi-product firm rationalizes these responses via anticipatory reallocation from low-skilled, low-margin services toward skill-intensive, higher-margin services. The findings show that policies relaxing skilled-labor constraints can change both input demand and output composition, so employment effects alone may substantially understate firms' responses.