Settling for Academia? H-1B Visas and the Career Choices of International Students in the United States

For the first time since the inception of the H-1B visa, yearly caps became binding in 2004, making it harder for most foreign-born students to secure employment in the United States. However, since the year 2000, institutions of higher education and related non-profit research institutes had been exempt from the cap. We explore how immigrant employment choices were impacted by the binding visa cap, exploiting the fact that citizens of five countries (Canada, Mexico, Chile, Singapore and Australia) had access to alternate work visas. Our estimates suggest that international students from H-1B dependent countries became more likely to work in academic institutions if they graduated after 2004 than immigrants from the five countries with substitute work visas. Within academia, foreign-born graduates affected by the visa cap became more likely to work in a job unrelated to their field of study, while no such change occurred in the private sector –a finding consistent with the notion of workers "settling for academia." We conclude with an analysis of workforce compositional changes in the academic versus private sectors as a result of the binding visa caps.