We also present a variety of empirical tests that consistently show no evidence of any manipulation behavior that would cause restaurants to cluster just above the thresholds. For example, restaurants leaving fake reviews for themselves should have more 5-star reviews and fewer reviews per reviewer. We find no evidence that restaurants with these types of characteristics cluster just above the thresholds. Two questions emerge when considering the effects of Yelp ratings on restaurant demand. First, do the effects represent the transmission of information on restaurant quality or do they represent a marketing effect generated by Yelp’s ranking system? Second, what changes in customer flows and profits are consistent with the observed changes in reservation availability? Our estimates may not represent a pure effect of information regarding restaurant quality if the order in which Yelp lists restaurants on its website is a function of a restaurant’s displayed average rating rather than its true average rating. In that case, restaurants just above a Yelp threshold would be significantly more likely to be seen by consumers browsing Yelp than restaurants just below a Yelp threshold. However, we find that the order in which Yelp lists restaurants is not affected by the displayed average rating . We thus conclude that increased information about restaurant quality causes higher-rated restaurants to have lower availability, rather than any effect of increased visibility. To gauge what changes in customer flows could be consistent with our result that an extra half-star on Yelp causes a 19 percentage point decrease in reservation availability, we performed a series of simple statistical calibrations. First, we recorded the capacity of each restaurant in a sub-sample of 73 restaurants. Next,big plastic pots we assumed that a restaurant has no reservation availability if the number of seats reserved for a given evening reaches its capacity. Finally, we examined the average customer flows that would be consistent with reservation availability rates of 58% and 39% under different assumptions about the distribution of arriving customers.

Our calibrations suggest that the median restaurant might experience an increase in customer flows of 6% or more if its reservation availability drops from 58% to 39%. Modest changes in customer flows, however, can have a significant impact on profits in an industry with high fixed costs and high margins. A typical mid-to-high-end restaurant with $20,000 per week in sales and a margin of 68% on food and beverage sales, earns approximately $2,000 per week in pre-tax profit. In comparison, a 6% increase in customer flow translates into an additional revenue gain of $816 per week in pre-tax profit. Of course, the increase in profit will be lower if the restaurant is capacity constrained or if it has to expand staffing levels to maintain service. Nevertheless, the calibrations suggest that a typical restaurant could experience substantial gains in profit when crossing a Yelp threshold. In summary, the effects we estimate are large, and they indicate a valuable use of crowd-sourced information: because Yelp collects and aggregates the experiences of a large number of patrons, Yelp provides a convenient forum to solve asymmetric information problems about the quality of unfamiliar restaurants. Tightening the link between restaurant quality and restaurant patronage may well have positive benefits for society. Crowd-sourced quality information may improve the average quality of consumed meals via two mechanisms. First, it can redirect consumers to higher quality restaurants. Second, it can induce lower quality restaurants to shut down or improve their quality in response to changes in customer demand. We provide direct evidence of the first mechanism, but we cannot speak to the second mechanism. With the rapid spread of Yelp and other similar crowd-sourcing websites, this suggests that market evolution may be an important avenue of future research.S 744 authorizes up to $6.5 billion in additional spending to “secure” the 2,000 mile Mexico-U.S. border. The border would be considered secure if 100% of the border is under surveillance and 90% of those attempting to cross illegally are apprehended in areas that have had more than 30,000 apprehensions a year. There were three such areas in 2012: Tucson, the Rio Grande Valley, and Laredo.

Currently, only employers in some states and those with federal contracts must use E-Verify, the Internet-based system that allows employers to submit data on newly hired workers to DHS to determine if they are legally authorized to work in the United States. S 744 assumes that foreigners will be discouraged from coming to the United States if they are not certain employers will hire them, so it requires all employers to check new hires using the E-Verify system within five years. Employers with more than 5,000 employees would have to use E-Verify within two years of enactment, those with more than 500 employees within three years, and all others a year later. That is, most farm employers would have four years before they have to check the legal status of newly hired workers via the Internet. Employers would not have to check current employees. When hired, non-U.S. citizens would have to show employers a “biometric work authorization card” or immigrant visa that includes a photo stored in the E-Verify system and can be seen over the Internet by the employer. In states that put photos on driver’s licenses, new hires could present drivers’ licenses for the required photo. After DHS submits a plan to secure the Mexico-U.S. border, expected within six months of enactment, unauthorized foreigners who were in the United States before December 31, 2011 could pay $500, any back taxes they owed, and application fees to become “registered provisional immigrants” for six years. This RPI status could be renewed after six years for another $500 fee. Unauthorized foreigners would have two years after S 744 is enacted to apply for RPI status. After 10 years, if a series of enforcement indicators demonstrate that unauthorized migration is “under control” and the backlog of foreigners waiting for immigrant visas is eliminated, RPIs could apply for regular immigrant status by showing they have worked and lived in the United States since registering.

They would have to pay another$1,000 fee and pass a test of English and civics and, after three more years, these now-regular immigrants could apply for United States citizenship. Provisional RPIs would not be eligible for most federal means-tested welfare benefits, including Food Stamps and subsidized health insurance under the Affordable Care Act. RPIs are likely to be eligible to purchase health insurance on the state exchanges that begin operation in 2014, but could not receive the federal subsidies available to those with low earnings. There is a separate legalization program for unauthorized farm workers that provides a faster path to immigrant status. Unauthorized farm workers who did at least 100 days or 575 hours of U.S. farm work in the 24 months ending December 31, 2012 could become RPIs and receive blue or agricultural cards by paying an application fee and a $100 fine under a program that would operate for a year after implementing regulations were issued. The spouses and children of RPI farm workers could also register and receive permission to live and work in the United States in any job . In order to become immigrants,growing berries in containers agricultural RPIs would have to do at least 150 days of farm work a year for three years in the eight years after enactment of S 744 or 100 days of farm work a year in five of the first eight years after enactment. To become immigrants, agricultural RPIs would have to pay an application fee and a $400 fine, and the family members of RPIs could apply for immigrant visas when the farm worker does.The United States now has three major guest worker programs. The H-1B program admits about 100,000 foreigners a year with a college degree who enter the United States to fill a U.S. job that requires a college degree; about half of H-1B visa holders are employed in IT-services. The H-2A program admits an unlimited number of foreign farm workers, about 60,000 a year recently, to fill seasonal farm jobs after the U.S. Department of Labor certifies farm employers as needing foreign workers. The H-2B program admits up to 66,000 foreign workers a year to fill seasonal non-farm jobs. Under S 744, more H-1B visas would be made available and there would be new guest worker programs for farm and non-farm workers. The number of regular H-1B visas would increase from the current 65,000 a year to 110,000, and the number of visas for foreigners who have earned advanced degrees from U.S. universities would increase from 20,000 to 25,000. A High Skilled Jobs Demand Index could allow the number of H-1B visas to rise by 10,000 a year to a maximum of 180,000, depending on employer requests for H-1B visas, and H-1B workers sponsored by their U.S. employers for immigrant visas would not be counted against the quota. In an attempt to satisfy critics who allege that the H-1B program allows U.S. employers to replace U.S. workers with H-1B workers, all employers of H-1B workers would have to try to recruit U.S. workers for at least 30 days before hiring H-1B workers by posting job openings on a web site and certifying that they did not lay off U.S. workers to open jobs for H-1Bs.

Spouses of H-1B workers could work in the United States if their country of origin provides reciprocal treatment of the spouses of U.S. workers. Employers considered to be “H-1B dependent,” that is, having mostly H-1B employees, would have to pay higher wages and fees and could be prohibited from hiring additional foreigners with H-1B or L-1 visas. Firms with more than 30% of their U.S. workers on temporary visas would have to pay $5,000 for each new temporary foreign worker, and those with more than 50% foreign workers would not be able to sponsor more after 2016. So-called “body shops” that bring H-1B workers into the United States and send them from one employer to another would have their access to foreign workers restricted— a blow to India-based out sourcers. The current H-2A program that admits foreign farm workers would be replaced by new W-3 and W-4 guest worker programs a year after S 744 is enacted. USDA would develop the regulations to implement the W-3 and W-4 programs and adjust the number of farm workers admitted. The W-3 program would be like the current H-2A program and tie a foreign farm worker to a particular U.S. farm employer and job for up to three years. However, W-3 farm workers could work for another registered U.S. farm employer, known as a Designated Agricultural Employer , after they completed their initial contracts. The W-4 program resembles the Replenishment Agricultural Worker program in IRCA that was never implemented. W-4 visa holders would need an initial job offer from a DAE to enter the United States, but could “float” from one DAE to another during the three years that their W-4 visas were valid. Both W-3 and W-4 visa holders could re-enter the United States for another three-year term after spending at least 90 days outside the United States. The number of W-3 and W-4 visas would initially be capped at 112,333 a year, so that a maximum of 337,000 new guest workers could be in the United States at any one time during the three-year period that currently unauthorized farm workers who receive probationary immigrant status are required to continue doing farm work. USDA could recommend an adjustment to the number of W-2 and W-3 visas during the first five years after enactment of S 744, and adjust the number in consultation with the DOL after that. Minimum hourly wages are established in S 744 for six farm worker occupations. Beginning in 2016, crop workers across the United States must be paid at least $9.64 an hour, graders and sorters $9.84, livestock and dairy workers $11.37, and equipment operators $11.87. These minimum wages will be adjusted each year according to the Bureau of Labor Statistics’ Employment Cost Index by at least 1.5% and no more than 2.5%. California farmers should benefit from a national minimum wage for guest workers that is significantly less than the average hourly earnings of California farm workers, which were $12.56 an hour in 2012.