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

Author

Listed:
  • DeVaro, Jed
  • Norlander, Peter

Abstract

This study explores what determines employers' violations of the wage contracts of workers on H-1B temporary work visas, which occur when firms pay those workers below the promised prevailing or "market" wage. A theoretical framework is proposed that predicts more violations during economic downturns, fewer violations when firms have more labor-market power, and more violations by subcontractor firms. Empirical analysis is based on a firm-level matched dataset of wage and hour violations and the firms that sponsor H-1Bs. Higher labor market power, measured by the Herfindahl-Hirschman Index, is associated with fewer violations. Higher unemployment rates and subcontractor firms are associated with more violations. The effects of the unemployment rate and labor market power are amplified in subcontractor firms.

Suggested Citation

  • DeVaro, Jed & Norlander, Peter, 2021. "Wage Theft, Economic Conditions, and Market Power: The Case of H-1B Workers," GLO Discussion Paper Series 855, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:855
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    More about this item

    Keywords

    wage theft; guest workers; H-1B workers; labor market competition; wage and hour laws; monopsony labor market;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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