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The Impact of Immigration Policy Shift on the Labor Market of IT Professionals
Abstract: In today’s digital economy, IT professionals provide strategic and competitive advantages for firms and nations. Examining a significant immigration policy shift in the United States during 2017–2020, initiated by the Buy American Hire American executive order and subsequent heightened scrutiny of the H-1B program, we identified a growing wage disparity between immigrant and American IT professionals. Analyzing individual-level wage data in the last two decades, we identify that immigrant IT professionals experienced 8.33% higher annual wage growth ($7,257 more) compared to demographically similar American peers in the same industries between 2017 and 2020. This phenomenon is isolated to IT-related occupations and is most pronounced for new immigrants and workers from countries with high H-1B application rates, supporting a robust connection to recent immigration policy changes. Evidence in falsification tests argues against alternative explanations, strengthening our key findings. Further mechanism tests reveal that this gap is most pronounced in IT hubs, among recently relocated immigrants, and within large firms—patterns that persist even after accounting for rising sectoral demand. These results, combined with analysis using prevailing wage and occupation data for the H-1B applicants, suggest heightened immigration scrutiny disproportionately barring lower-wage immigrant applicants (likely those with lower skills), creating a policy-induced wage premium for retained immigrants. This premium reflects firms’ strategic adjustments: large firms and IT hubs leveraged financial and administrative capacity to meet stricter visa criteria, retaining high-skilled immigrants through elevated wages, while recent relocations potentially signal active selection for expertise. Lastly, we provide suggestive evidence that the resulting high denial rates and prevailing wages of H-1B visas due to the increased scrutiny are associated with higher exits of smaller businesses. These insights underscore how immigration policy changes, despite unchanged visa quotas, exacerbate wage inequality and market concentration—impacting small businesses and domestic workers—while highlighting the importance of evidence-based policies to address labor market adjustments, support workforce preparedness, and maintain competitiveness in high-demand sectors.
Bio: Che-Wei Liu is an associate professor of information systems at the W. P. Carey School of Business, Arizona State University. He completed his Ph.D. at the University of Maryland. His research addresses the impact of digital technologies on users’ behaviors in areas such as mobile health, IT labor market, stock market, and job interviews. His research has been accepted in premier journals such as Management Science, MIS Quarterly, Information Systems Research, Production and Operations Management, Journal of Management Information Systems, and Journal of Economic Behavior & Organization. He earned multiple prestigious research awards and nominations, including recognition for Best (Student) Paper achievements at ICIS, ICSH, and CIST. He was also honored with the All-S.T.A.R. Fellowship and the CIBER Ph.D. Research Award from the University of Maryland, the ODT Faculty Scholar Award from the Kelley School of Business, and the Gordon B. Davis Young Scholar Award from the Information Systems Society.