Immigrant workers at companies with Republican-leaning CEOs end up making 8% less than those at firms led by Democrats.
While we usually think of corporate pay as being set by the market, this study shows that a CEO’s personal political ideology directly impacts the salaries of H-1B visa holders. This 'ideology tax' actually harms the companies in the long run, leading to lower innovation and higher financial risk.
The Elephant vs Donkey and Rank-and-file Employee Compensation
SSRN · 6316058
We examine how executive political ideology shapes rank-and-file employee compensation. Using over 300,000 H-1B applications from 2010-2020, we document that firms led by Republican-leaning executives pay approximately 8% lower wages to H-1B workers than Democratic-leaning firms, after considering firm, job, and location characteristics. These findings align with agency theory and upper-echelons theory, which predict that managerial preferences influence organizational policies when discretion i