Foreign visa salary requirement and natives’ reservation wages

Zahra Murad and Robert Dowell
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Robert Dowell: Funding Circle

No 2020-06, Working Papers in Economics & Finance from University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group

Abstract: We study whether reservation wages of native workers are affected by the information about visa salary requirements for foreign workers. We conduct two experiments to test the hypothesis, a survey experiment on university students and an incentivized experiment with workers on an online labour platform. We find that native workers’ reservation wages are higher when exposed to a high than low visa salary requirement for foreign workers. We test for several mechanisms behind this finding. Our results can partly be explained by the visa salary requirement information acting as an anchor reference point for fair wage perceptions which in turn affects reservation wages. Our results highlight the importance of unintended consequences of immigration policies on local labour markets.

Keywords: reservation wages; fair wages; visa salary requirement; immigration policy; experiment (search for similar items in EconPapers)
JEL-codes: C83 C90 E24 (search for similar items in EconPapers)
Pages: 33
Date: 2020-04-30
New Economics Papers: this item is included in nep-exp, nep-gen and nep-mac
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