The H-1B visa is a nonimmigrant employer-sponsored program that allows US companies to hire foreign nationals in "specialty occupations," typically requiring a bachelor's degree or higher. The vast majority of these occupations are computer-related (69% of petition filings according to 2017 data). And they are disproportionately filled with high-skilled talent coming from two countries: China and India (85% of filings for the same time period).
So this week's announcement that H-1B visas will now require employers to pay $100,000 per year per visa is a direct way of saying, "we want fewer people from China and India working in tech in the US."
But as with most economic policies, it's more than that. And we already have the research. In 2020 (and then in 2023), Britta Glennon of the University of Pennsylvania (my alma mater) studied the effects of restricting high-skilled labor on offshoring. More specifically, she looked at two visa supply shock periods: the first being a 2004 cap that lowered H-1B visas by 70% and the second being a 2008–2009 lottery program which generated a random negative shock.
The H-1B visa is a nonimmigrant employer-sponsored program that allows US companies to hire foreign nationals in "specialty occupations," typically requiring a bachelor's degree or higher. The vast majority of these occupations are computer-related (69% of petition filings according to 2017 data). And they are disproportionately filled with high-skilled talent coming from two countries: China and India (85% of filings for the same time period).
So this week's announcement that H-1B visas will now require employers to pay $100,000 per year per visa is a direct way of saying, "we want fewer people from China and India working in tech in the US."
But as with most economic policies, it's more than that. And we already have the research. In 2020 (and then in 2023), Britta Glennon of the University of Pennsylvania (my alma mater) studied the effects of restricting high-skilled labor on offshoring. More specifically, she looked at two visa supply shock periods: the first being a 2004 cap that lowered H-1B visas by 70% and the second being a 2008–2009 lottery program which generated a random negative shock.
What she uncovered in the first case was that the 2004 policy change increased
foreign
affiliate employment by 27%! And in the second case, a random one-percentage-point drop in H-1B visa supply caused an increase in the foreign affiliate growth rate of between 12 and 16%. Said differently, when H-1B visas become harder to get, US tech companies simply hire more people in other countries.
More specifically, they ramp up hiring in these three countries: China, India, and Canada. China and India are what you might call a direct channel. The company just opens or expands an existing office by hiring the people that would have otherwise come to the US. Canada, on the other hand, largely serves as an indirect channel. We become a conveniently-located conduit through which US firms can hire the same high-skilled humans from China and India (because we don't restrict high-skilled talent in the same way).
So another way to interpret this week's announcement is that the US is making deliberate moves to increase high-skilled tech employment in Canada, China, and India. That's a good thing for these countries. Of course, the real opportunity is not as an affiliate or back-office location for US firms. The real opportunity is to harness this high-skilled talent and empower them to start their own companies in the countries where they will now live.
Next to the US, China is likely in the best position to do that. But it’s also Canada’s opportunity to squander.
Update: After clearly stating that it would be an annual fee of $100k and that the big tech companies all "love it," it appears the US has backpedaled. It will now be a one-time fee of $100k paid at the time of petition filing. This is still a lot. Currently, the fees are in the hundreds of dollars.
On this blog, we often talk about city building in the context of doing things to help improve a city -- whether that be a development project, a new public art mural, or an interesting local business. These interventions help to build a city. But even more specifically, the term has, for many, come to mean building up a city in a positive way.
But there is another way to think about city building. You can think of it in terms of building actual new cities. We've spoken about some of these before, namely this one in California and this odd one in Saudi Arabia. But apparently it is becoming more common. According to The Economist, the world is now building more new cities than it has in the last 80 or so years:
Egypt’s “New Administrative Capital” is part of a rush of city-building. Firms and governments are planning more settlements than at any time in the post-war period, with many already under construction. Ninety-one cities have been announced in the past decade, with 15 in the past year alone. In addition to its new capital in the north, Egypt is building five other cities, with plans for dozens more. India is considering eight urban hubs. Outside Baghdad, Iraq, workers have just broken ground on the first of five settlements.
In some cases, it is being done as a solution to urban congestion. If this city is too expensive and unaffordable, just create a new one. This appears to be part of the idea with the above city outside of San Francisco. Of course, new cities can also be created for ideological reasons, or for political purposes, which was the case with Brazil's capital city, Brasilia.
Here, the idea was to move the federal capital away from the country's populated southeast region to a more geographically neutral location in the middle of the country. It also turns out that seeding a new city with government institutions is a good way to get one of these started. Existing cities do, after all, benefit from network effects.
History points to characteristics shared by successful projects. State institutions can help anchor cities, as Brasília (in Brazil) and Chandigarh (in India) showed in the 20th century. Although both have had problems, people in Brazil and India are voting with their feet. Brasília’s population is growing at 1.2% a year, more than double the national average. Chandigarh, a state capital, is now India’s fourth-richest region on a per-person basis.
But putting money, ego, and ideology aside, when does it actually make sense to start a new city in lieu of just expanding (or addressing the problems in) the one(s) you've already got? Population size can't be the only factor in determining whether a city is "full", because Tokyo seems to do just fine as the largest metropolitan area in the world.
If it hasn't already been done, I think this would make for an interesting research project. Until then, there's this (paywalled) Economist article.
Prior to COVID, many projections had the world's population plateauing sometime in the second half of the 21st century. This is expected to happen because about half of the world's population now lives in a country where the fertility rate is less than the replacement rate of 2.1 children for every woman. See above chart from
What she uncovered in the first case was that the 2004 policy change increased
foreign
affiliate employment by 27%! And in the second case, a random one-percentage-point drop in H-1B visa supply caused an increase in the foreign affiliate growth rate of between 12 and 16%. Said differently, when H-1B visas become harder to get, US tech companies simply hire more people in other countries.
More specifically, they ramp up hiring in these three countries: China, India, and Canada. China and India are what you might call a direct channel. The company just opens or expands an existing office by hiring the people that would have otherwise come to the US. Canada, on the other hand, largely serves as an indirect channel. We become a conveniently-located conduit through which US firms can hire the same high-skilled humans from China and India (because we don't restrict high-skilled talent in the same way).
So another way to interpret this week's announcement is that the US is making deliberate moves to increase high-skilled tech employment in Canada, China, and India. That's a good thing for these countries. Of course, the real opportunity is not as an affiliate or back-office location for US firms. The real opportunity is to harness this high-skilled talent and empower them to start their own companies in the countries where they will now live.
Next to the US, China is likely in the best position to do that. But it’s also Canada’s opportunity to squander.
Update: After clearly stating that it would be an annual fee of $100k and that the big tech companies all "love it," it appears the US has backpedaled. It will now be a one-time fee of $100k paid at the time of petition filing. This is still a lot. Currently, the fees are in the hundreds of dollars.
On this blog, we often talk about city building in the context of doing things to help improve a city -- whether that be a development project, a new public art mural, or an interesting local business. These interventions help to build a city. But even more specifically, the term has, for many, come to mean building up a city in a positive way.
But there is another way to think about city building. You can think of it in terms of building actual new cities. We've spoken about some of these before, namely this one in California and this odd one in Saudi Arabia. But apparently it is becoming more common. According to The Economist, the world is now building more new cities than it has in the last 80 or so years:
Egypt’s “New Administrative Capital” is part of a rush of city-building. Firms and governments are planning more settlements than at any time in the post-war period, with many already under construction. Ninety-one cities have been announced in the past decade, with 15 in the past year alone. In addition to its new capital in the north, Egypt is building five other cities, with plans for dozens more. India is considering eight urban hubs. Outside Baghdad, Iraq, workers have just broken ground on the first of five settlements.
In some cases, it is being done as a solution to urban congestion. If this city is too expensive and unaffordable, just create a new one. This appears to be part of the idea with the above city outside of San Francisco. Of course, new cities can also be created for ideological reasons, or for political purposes, which was the case with Brazil's capital city, Brasilia.
Here, the idea was to move the federal capital away from the country's populated southeast region to a more geographically neutral location in the middle of the country. It also turns out that seeding a new city with government institutions is a good way to get one of these started. Existing cities do, after all, benefit from network effects.
History points to characteristics shared by successful projects. State institutions can help anchor cities, as Brasília (in Brazil) and Chandigarh (in India) showed in the 20th century. Although both have had problems, people in Brazil and India are voting with their feet. Brasília’s population is growing at 1.2% a year, more than double the national average. Chandigarh, a state capital, is now India’s fourth-richest region on a per-person basis.
But putting money, ego, and ideology aside, when does it actually make sense to start a new city in lieu of just expanding (or addressing the problems in) the one(s) you've already got? Population size can't be the only factor in determining whether a city is "full", because Tokyo seems to do just fine as the largest metropolitan area in the world.
If it hasn't already been done, I think this would make for an interesting research project. Until then, there's this (paywalled) Economist article.
Prior to COVID, many projections had the world's population plateauing sometime in the second half of the 21st century. This is expected to happen because about half of the world's population now lives in a country where the fertility rate is less than the replacement rate of 2.1 children for every woman. See above chart from
At the start of the pandemic, there was talk of a possible COVID baby boom. People were/are stuck at home and so that would surely translate into more sex among partners. But that doesn't appear to have been the case for many countries. According to The Economist, births fell by 15% in China last year. The same drop was recorded in the United States last year between February and November.
Because of this trend, the above projections are now being adjusted and pulled forward, with some predicting that the world's population could plateau as early as the 2050s. That's only about 30 years from now, which means that quite a few of us could end up living in a world with a declining population. This is likely to have both positive and negative consequences.
There are nearly 8 billion people in the world today with China and India being the countries with the greatest numbers. But it's interesting to consider how recent this figure really is (compounding takes time to gain momentum).
The world didn't hit a billion people until the 19th century, and the second billion was only reached by the 1920s, which in the grand scheme of things, isn't that long ago. Since then the global population has exploded with about 6 billion people being added in only the last 100 years. That's pretty wild when you think about it.
P.S. I recently discovered a site called outline.com. It allows you to read, highlight, and annotate articles that you find online. But it also seems to allow you to read articles behind paywalls. Perhaps some of you will find that useful.
At the start of the pandemic, there was talk of a possible COVID baby boom. People were/are stuck at home and so that would surely translate into more sex among partners. But that doesn't appear to have been the case for many countries. According to The Economist, births fell by 15% in China last year. The same drop was recorded in the United States last year between February and November.
Because of this trend, the above projections are now being adjusted and pulled forward, with some predicting that the world's population could plateau as early as the 2050s. That's only about 30 years from now, which means that quite a few of us could end up living in a world with a declining population. This is likely to have both positive and negative consequences.
There are nearly 8 billion people in the world today with China and India being the countries with the greatest numbers. But it's interesting to consider how recent this figure really is (compounding takes time to gain momentum).
The world didn't hit a billion people until the 19th century, and the second billion was only reached by the 1920s, which in the grand scheme of things, isn't that long ago. Since then the global population has exploded with about 6 billion people being added in only the last 100 years. That's pretty wild when you think about it.
P.S. I recently discovered a site called outline.com. It allows you to read, highlight, and annotate articles that you find online. But it also seems to allow you to read articles behind paywalls. Perhaps some of you will find that useful.
