Skilled immigration and employment: the heavy cost of anti-talent policies

On 19 September 2025, President Trump signed an executive order imposing a significant increase in the fee for each new H-1B application, raising it to $100,000. The H-1B is the work visa that allows employers in the United States to temporarily hire highly skilled foreign workers. The measure was explicitly justified with the aim of encouraging companies to “train Americans” rather than hire foreign staff. A federal judge blocked it in June 2026, but the Administration immediately reintroduced an almost identical version, set at $103,265, which was put out for public consultation on 25 August for a period of 30 days. The consultation has now closed, and the U.S. Department of Homeland Security (DHS) will now have to review the comments and publish a final regulation.

On the other side of the Atlantic, the United Kingdom has followed suit: it has raised the minimum salary threshold for the Skilled Worker Visa, the main route of entry for qualified foreign professionals. With the White Paper on immigration of 12 May 2025 and the amendments that came into force on 22 July, the threshold has almost doubled, from 26,200 to 41,700 pounds a year. The stated aim, in this case too, is to restrict access to the labour market for foreign nationals in order to prioritise the recruitment of British citizens. Australia has also recently joined the other two English-speaking countries, introducing new restrictions on visas for skilled workers designed to bring net immigration back into line by 2026–27.

Three countries, three governments, the same strategy: to make it more difficult and costly for companies to recruit foreign engineers, researchers and IT specialists for highly specialised roles. But does this strategy really pay off in terms of domestic employment? And, given that these are by definition highly skilled workers, what impact does it have on innovation?

To truly understand the scale of the phenomenon, it is useful to look at the effects of a historical precedent on which there is now a well-established body of literature: the decision taken by the US government in 2004 to cut H-1B visas by two-thirds. It was a sudden decision, not anticipated by businesses, designed explicitly to protect the domestic labour market. Leading researchers tell us that the objective was not achieved.

The study by Nayak, Moreira and Mudambi, published in 2025 in the Journal of International Business Studies, analyses a sample of 707 US multinationals and 371,856 patents. The authors demonstrate that the 2004 cut in H-1B visas prompted companies to increase the geographical dispersion of their research teams to overseas subsidiaries by 4.7 per cent. The consequence was a 4.15 per cent decline in overall patent output and a 5.32 per cent reduction in the technological novelty of completed projects. Along similar lines is the study by Britta Glennon, published in Management Science: when a multinational company wins fewer visas than expected in the H-1B lottery, a large proportion of the lost employment growth shifts to overseas subsidiaries, whilst domestic employment of native workers remains unchanged. In short, companies’ response to restrictions is not to hire locally: instead, it is to relocate.

Taken together, these findings indicate that the reduction in H-1B visas in 2004 led to a fall in the employment of highly skilled foreign workers without, in return, generating any increase in the recruitment of native workers. The analyses show that US and foreign workers operate as complementary factors, not as substitutes for one another. The visa cap thus proves to be a constraint on businesses’ growth and capacity for innovation, rather than a measure to protect local employment.

Confirming this picture, in a series of papers published in the Journal of Labour Economics, economists Kerr and Lincoln analyse the reforms to the H-1B visa scheme between 1995 and 2006. They demonstrate that the overall rate of innovation increases with higher levels of foreign admissions, thanks to the direct contribution of foreign inventors, whilst the effect on patents held by native workers is either nil or only weakly positive. There is therefore no ‘crowding-out effect’ to compensate for. Skilled immigration, the authors conclude, boosts a firm’s overall innovation whilst having a limited impact on the characteristics of patents already filed. It is not, therefore, a ‘different’ form of innovation that replaces local innovation, but rather ‘additional’ innovation that improves the performance of the entire firm.

In conclusion, if a country makes it more difficult for highly qualified foreign researchers to access its laboratories, it is not protecting its own workers: it is handing over the most valuable part of its capacity for innovation to its competitors. The data show that closing the doors to skilled immigration does not bring back the jobs one sought to protect. It simply shifts them elsewhere, along with the patents, revenue and growth that those jobs would have generated. Imposing visa caps, therefore, means trading a structural problem – the gap between supply and demand for advanced skills – for a measure that merely exacerbates its most mobile component: namely, research and development, which is capable of relocating elsewhere in a short space of time.

For a country like Italy, which is not known for its ability to attract skilled immigrants, the lesson is twofold. Firstly, any tightening of our entry policies for foreign scientific and technical personnel would risk producing, on a smaller scale, the same boomerang effect documented in the American case: less research carried out at home, and fewer jobs for Italian graduates. Secondly, any restriction imposed by major global technology hubs temporarily frees up talent and research capital that could be snapped up by those offering more favourable entry conditions. This is an opportunity which, however, requires competitive regulatory and fiscal frameworks – frameworks that are largely absent in our country at present.

At a time when global competition for talent is intensifying precisely because of other countries’ restrictive policies, the real strategic choice for a medium-sized country is not whether to close its doors, but how quickly it can open them – and do so better than others.