Proposed reform of the H-1B programme under Trump administration and the adverse selection in Green Card applications

ABSTRACT

The dialogue of major reform in immigration laws along with increase in rejection of H-1B petitioners since the start of the Trump administration may make employers find H-1B renewal becoming more difficult and costly for low-end positions and less-educated employees. Using the Program Electronic Review Management (PERM) application data, this article examines the impact of the recent threat of immigration reform on the share of entry-level positions and petitioners with no college degree in Green Card applications. We found evidence that entry-level positions and applicants without a college degree became more heavily represented among new PERM applications after 2016, even when a trend and occupations were accounted for. The findings are consistent with the hypothesis that employers face stronger incentive to retain workers and sponsor their PERM applications since H-1B renewal will likely become more difficult and costly for low-end positions and less-educated workers.

KEYWORDS:

• Immigration
• H-1B visa
• Green Card
• PERM
• adverse selection

JEL CLASSIFICATION:

• J61
• J68
• F21
• D81
• D83
• K37

Highlights

• The dialogue of tightening H-1B programmes under the Trump administration may incentivize employers to retain low-end workers before the rule change.

• We investigate the possibility of increased likelihood of sponsoring H-1B employees for permanent residency.

• Positions with entry-level duties and applicants with a lower level of education are more heavily represented in the PERM applications by H-1B holders after 2016.

Acknowledgements

We are thankful to Madeline Zavodny for her helpful comments and suggestions. The opinions expressed here are solely those of the authors.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ PERM is not required for EB1 green card, which is used for distinguished experts.

² The partial data from 2019 are not used.