Do U.S. Corporations Hire U.S. Educated Skilled Immigrants to Lower their Labor Costs? Evidence from the Audit Industry

Abstract

Immigrants receiving advanced educational degrees in the U.S. play an increasingly important role in the U.S. economy. Visa regulation concerning their employment by U.S. corporations, however, is a subset of the overall H-1B visa policy that has remained largely unchanged over the last 25 years or so. Policy makers unanimously agree that H-1B visa regulation, particularly concerning US-educated immigrants, needs a comprehensive reform. Hindering reform is the belief that U.S. corporations hire H-1B immigrants, whether educated in the U.S. or abroad, to lower the wages of native workers, not to meet the shortfall of skilled labor. No systematic evidence exists on the wage-depressing argument related to U.S. educated skilled immigrants. We contribute to the debate by examining the wage-depressing argument in the audit industry, which is a significant employer of U.S.-educated skilled immigrants. We find no evidence for this argument in our setting. Our study should interest researchers and policy makers as it supports the case for delinking the regulation reform for immigrants receiving advanced degrees in the U.S. from the overall H-1B visa reform.

Keywords: Skilled immigration, H-1B visa reform, Compensation, Human capital, Globalization, Audit industry

JEL Classification: J24, J61, K37, M12, M48