The Effect of a Negative Guestworker Supply Shock on the Alaska Seafood Processing Industry

Abstract

Using data from the Quarterly Census on Employment and Wages from the U.S. Bureau of Labor Statistics, this paper describes the effect of the U.S. Department of State’s 2012 interim final rule (IFR), which prohibited seafood processing jobs from its J-1 Visa Summer Work Travel (SWT) Program. A differences-in-differences regression is used to estimate the effect of the 2012 IFR, with fixed effects for state and time, while controlling for state-level GDP . The coefficient of the interaction between the state and time fixed effects is found to be statistically non-significant for both wages and employment, suggesting that the ban of seafood processing jobs from the SWT Program had virtually no effect on the wages or employment level of workers in the Alaska seafood processing industry as compared to an absence of the treatment. The results suggest low substitutability between J-1 and native workers, which is consistent with prior literature suggesting low substitutability between H-1B and native workers. Future studies include examinations of cross-visa effects, cluster analyses to differentiate the effects of the negative supply shock on native workers versus J-1 workers or contrasting these effects with those of positive labor supply shocks.