Mithas & Lucas “U.S. Visa Policies and Compensation of Information Technology Professionals”

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Management Science, Vol. 56, No. 5, May 2010, pp. 745–765, pdf

We find that after controlling for their human capital attributes, foreign IT professionals (those without U.S. citizenship and those with H-1B or other work visas) earn a salary premium when compared with IT professionals with U.S. citizenship. The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas…
Collectively, the presence of salary premiums for foreign professionals even when a visa cap is under-utilized and the fact that H-1B professionals’ salary premiums are more directly affected by H-1B visa restrictions than that of green card holders imply that (1) foreign IT professionals are complements of American IT professionals, and (2) H-1B professionals may be substitutes for each other because a reduction in their supply affects their wages much more than that of green card holders.

We find that after controlling for their human capital attributes, foreign IT professionals (those without U.S. citizenship and those with H-1B or other work visas) earn a salary premium when compared with IT professionals with U.S. citizenship. The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas…

Collectively, the presence of salary premiums for foreign professionals even when a visa cap is under-utilized and the fact that H-1B professionals’ salary premiums are more directly affected by H-1B visa restrictions than that of green card holders imply that (1) foreign IT professionals are complements of American IT professionals, and (2) H-1B professionals may be substitutes for each other because a reduction in their supply affects their wages much more than that of green card holders.

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