Creation or Destruction? STEM OPT Extension and Employment of Information Technology Professionals

Abstract

Information technology (IT) professionals play a critical role in digital transformation, innovation, and entrepreneurship, contributing to significant economic growth. The use of temporary work visas and related immigration policies has attracted significant controversy and policy debates in developed nations. On the one hand, foreign IT professionals can complement domestic IT professionals by bringing new skills and knowledge, which benefit domestic workers. On the other hand, foreign IT professionals may substitute for their domestic counterparts due to intensified labor-market competition. In this study, we focus on an extension in the Optional Practical Training (OPT) program in the U.S. for foreign science, technology, engineering, and mathematics (STEM) graduates from U.S. institutions. We explore the effects of the STEM OPT extension on the number and wage of domestic workers in STEM occupations and how these effects differ between IT and non-IT STEM occupations. We found that an increase in the supply of foreign STEM professionals from the OPT extension has boosted the employment of domestic workers in STEM occupations and that the effects are stronger for IT occupations. This study contributes to the information systems literature by demonstrating the unique effects of immigrant policies on IT occupations and provides significant implications for evidence-driven policy making.