International Economics Seminar Series: Third Country Effects of U.S. Immigration Policy with Agostina Brinatti, Yale

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For the first international trade seminar of the semester, the Georgetown Center for Business and Public Policy welcomed Agostina Brinatti, a Cowles Postdoctoral Associate at Yale University, to present her paper “Third Country Effects of U.S. Immigration Policy.” 

Agostina and her coauthor Xing Guo study the effects of U.S. skilled immigration restrictions on the Canadian economy and on American workers. In 2017, a new policy tightened the eligibility criteria for U.S. visas and increased the denial rate from 6% to 16%. The authors use a novel dataset of U.S. and Canadian visa applications to show that the policy led to a 30% increase in Canadian applications in 2018. By combining visa applications with Canadian employer-employee-linked records and international trade data, the paper finds that Canadian firms with an existing workforce composition skewed toward the affected nationalities and occupations hired more immigrants and native Canadians, experienced growth in sales and exports, and paid lower wages.

Agostina and Xing quantify the welfare effects of the policy change on American workers using a model of trade and immigration. They find that the policy benefits some American occupations, like computer scientists, who face less competition from immigrants in the labor market. However, it negatively affects workers in other occupations in sectors that contract because of a reduction in immigrant labor, resulting in an overall American workers’ welfare impact close to zero. They also find that international trade plays an important role in the efficacy of the immigration restrictions: the welfare gains for American workers targeted for protection are up to 25% larger in a closed economy compared to an economy with the observed trade levels.