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Are Immigrants Complements or Substitutes? Evidence from the Audit Industry, Management Science

Abstract

Extensive debate exists among policy makers and economists about the employment of highly skilled immigrants in the United States. It remains unclear whether these immigrants perform complementary tasks in addition to their substitutive role relative to native graduates. Empirical studies examining these questions in a focused setting are scarce, principally because of the nonavailability of data. We examine these questions using the audit industry as a setting because of the availability of client, city, and office characteristic data at each audit office. This setting also allows us to answer whether immigration can address the growing human capital constraint in the audit industry. We find evidence of a complementary role of highly skilled immigrants. In addition, our results indicate a reputational spillover of client restatements at the audit office level to the labor markets. Our findings have immigration and education policy implications.

Type

Article

Author(s)

Anup Srivastava, Daniel Aobdia, Erqiu Wang

Date Published

2017

Citations

Srivastava, Anup, Daniel Aobdia, and Erqiu Wang. 2017. Are Immigrants Complements or Substitutes? Evidence from the Audit Industry. Management Science.

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