Wage Theft, Market Power, and Outsourcing: The Case of H-1B Workers

63 Pages Posted: 3 Jun 2021 Last revised: 10 Feb 2022

See all articles by Jed DeVaro

Jed DeVaro

California State University, East Bay

Peter Norlander

Loyola University Chicago, Quinlan School of Business, Department of Management

Date Written: February 9, 2022

Abstract

Wage violations against H-1B visa holders (i.e., cutting their wages below a legally required prevailing wage) is analyzed theoretically and empirically. The theoretical model suggests that violations are more likely when firms have less labor market power, and in subcontractor firms that have been outsourced work. New empirical evidence supports these predictions, revealing that 60% of firms with at least one violation are subcontractors and that the incidence of violations is 40-65% less likely in a monopsony versus a competitive market. The results have implications for how scarce monitoring resources could be prioritized to minimize violations against guest workers.

Keywords: wage theft, guest workers, H-1B workers, labor market competition, wage and hour laws, monopsony labor market

JEL Classification: J31, J38, J42, J44

Suggested Citation

DeVaro, Jed and Norlander, Peter, Wage Theft, Market Power, and Outsourcing: The Case of H-1B Workers (February 9, 2022). Available at SSRN: https://ssrn.com/abstract=3858061 or http://dx.doi.org/10.2139/ssrn.3858061

Jed DeVaro

California State University, East Bay ( email )

25800 Carlos Bee Boulevard
Hayward, CA California 94542
United States
1(510)885-3289 (Phone)

HOME PAGE: http://www2.cbe.csueastbay.edu/fac_page/final/index.php?id=308

Peter Norlander (Contact Author)

Loyola University Chicago, Quinlan School of Business, Department of Management ( email )

16 East Pearson St
Suite 713
Chicago, IL 60611
United States
312-915-6615 (Phone)

HOME PAGE: http://https://www.luc.edu/quinlan/faculty/peternorlander.shtml

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