Admission-Group Salary Differentials in the United States: The Significance of the Labour-Market Institutional Selection of High-Skilled Workers

Abstract

In 1990, a temporary-to-permanent pathway was established for highly skilled workers admitted to the United States under non-immigrant programmes. This paper argues that this policy shift has allowed employers to play a crucial role in the immigration of highly skilled workers, thereby creating labour-market institutional selection that gives a salary advantage to highly skilled temporarily admitted workers retained in the US. Through analyses of the salary differentials among admission-category groups, the paper finds that the salary advantage is based on recruitment from Western countries, adjustment from temporary to permanent status after a second employer screening, working in the information technology sector and the private sector, holding a supervisory position, or having a skill-matched job, all of which are consequences of institutional selection rather than individual self-selection. The results also reveal a difference between those admitted from abroad and those recruited from graduating foreign students in US higher-education institutions, which suggests a distinction between overseas and domestic hiring. Policy implications for the US and other receiving countries are discussed.

Keywords:

• Immigration Policy
• High-Skilled Workers
• Labour-Market Institutional Selection
• Salary Structure
• Oaxaca Method
• United States

Acknowledgement

This research was supported by Grant SES-1020452 from the National Science Foundation, for which I am grateful.

Notes

1. The period between petitioning for status adjustment and approval varies depending on the availability of a home-country quota. Temporary workers who are sponsored, however, can continue to work legally during the waiting period.

2. Although incidences of programme abuse have occurred, they are largely related to back wages that employers failed to pay H-1B workers between the time they arrived and the time the jobs were available (GAO 2011).

3. According to its staff, the NSCG 2003 does not provide annualised salaries—as did the NSCG 1993—and the label of the 2003 variable is misleading.

4. The exponential of the log salary mean is the geometric mean of salary.

5. This paper used the Oaxaca command programmed by Ben Jann, which implements the updated Oaxaca method (see Jann 2008).