Research

The US is projected to face a shortage of 100,000 critical health care workers by 2028 because of domestic training capacity limitations and caps on work visas. I exploit random variation in the receipt of new H-1B visas via lotteries to study how highly skilled foreign workers affect domestic labor markets and firm production functions. I link the universe of cap-subject H-1B employers to rich administrative data for Medicare-certified nursing homes, including payroll and claims data. Immediately following the lottery news, prior to the worker's arrival, winning nursing homes: (1) win 2 H-1B visa petitions, (2) reduce employment by 7 full-time equivalent workers, mostly among lower-skilled nurses such as CNAs, and (3) reduce patient volume (output) by 5.8 percent. In further analysis, I show that facilities initially free up capacity by turning away low-complexity patients before shifting production toward high-complexity patients after the high-skilled H-1B worker arrives. These results are consistent with a transition to specialized, higher-margin care provided by the H-1B worker.