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U.S. firms hiring foreign workers in low-skill nonfarm jobs face a binding quota on the ‘H-
2B’ visa, allocated in part through a randomized lottery. We evaluate the quota’s marginal
impact using the lottery, a novel firm survey, and a pre-analysis plan. Firms exogenously
employing more H-2B workers in low-skill jobs increase production (elasticity 0.20–0.22),
investment (1.5–2.1), and profits (0.15). The elasticity of substitution between H-2B and
U.S. workers is very low (0.8–2.2). Thus the effect on U.S. employment is zero or positive
overall, and positive in rural areas. Forensic analysis suggests similarly low substitutability
of black-market labor.
