More labour, less family
Posted on June 2, 2011
I KNOW a man who came to America alone as a teenager with no money or contacts. Within ten years he had a PhD and high-paying job. Then the financial crisis hit and he lost his job. He had an H1-B visa at the time which meant that if he did not find another job fast he’d have to leave the country. It was a tense few months for him. For a while it looked like he might be deported. In the mean time his sister, who was not nearly as well educated, got a green card (which ensures permanent residence independent of employment) because she was a political refugee. And because she had a green card she was able to secure one for my friend’s mother, who had not finished elementary school.
According to the latest OECD Migration Outlook, America received 1,107,000 permanent immigrants in 2008. About 73% of them came for family re-unification, which often means they are unskilled. About 15% came as refugees, and only 7% were labour migrants, meaning they came for work. There were also 340,700 temporary migrants who came on student visas. So much family and refugee migration makes sense for humanitarian reasons, but does it make sense economically? The American economy would benefit from more skilled workers, so why do they make up such a small fraction of migrant flows?
Most OECD countries take more family than labour migrants. But in America labour migrants make-up an exceptionally small share. In Australia and Britain, labour migrants make up more than a quarter of annual flows. The low fraction of labour migrants in America is due to the few work visas available. Most labour migrants must have an American employer sponsor them. Most skilled workers initially come as temporary migrants under an H1-B visa. The H1-B is also how many foreign students stay and work after finishing their studies. After a few years, if your employer sponsors you, this can be converted into permanent residency. There are only 65,000 available H1-B visas each year, plus another 20,000 for advanced degree holders (that totals about one tenth the number of visas granted for family reunification).
It may seem counter-productive to want more labour migrants when unemployment is high, but immigrantion can actually be a source of job creation. Research from the Kauffman Foundation has found that more than half of all Silicon Valley start-ups had at least one foreign-born founder. Jennifer Hunt, an economist, has found that immigrants, who come as either students or on a H1-B, are more likely than natives to file a patent and commercialise their innovation. But you need an employer sponsor for an H1-B. So you when you migrate on this visa it’s hard, at least initially, to be self employed. While there’s evidence that this an exceptionally entrepreneurial population, America limits its numbers and designs visas to discourage entrepreneurship.
The question for immigration policy reform should be how America can attract immigrants who will contribute most to economic growth. There are good reasons for the absolute number of family and humanitarian migrants. It is important to keep in mind that low-skill migrants also make a significant contribution the American economy (and also tend to be entrepreneurial). But it seems odd that America makes it so hard for skilled migrants to come for work. Expanding the number of H1-Bs would be a good start. But it should also consider policies, already in place in Britain and Australia, which allow skilled migrants and students to come and work in America based on their skills and achievements.
31 May 2011
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