Arnold Kling  

Immigration Quota Management

Mental Health, Poverty, Health... Why Oh Why Can't Hayek Write B...

Russ Roberts writes,

There's going to be a point system to determine who gets one of the precious 380,000 visas that are up for grabs. Highly educated people get points. People with skills that are in high demand, whatever that means, get points. Young but not too young? Points. Speak English well? More points for you...

Some people complain that the Bush Administration is too free market. But the idea that Washington bureaucrats can figure out which skills are in high demand is an idea straight out of the old Soviet Union. It would be great if we could get some old communists from the politburo to administer it, but we won't be able to. They won't score high enough on the point system to get a visa.

Read the whole thing. Of course, we have immigration quotas as it is, and they are not administered rationally. It would seem that the logical recommendation, which many economists have made, is an immigration tariff.

Which leads to the next logical idea. Instead of a tariff, where the proceeds go to the government, treat citizenship as an individual property right, including alienability. Dwight Lee was the first to suggest this approach. It's an idea that only an economist could love.

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COMMENTS (8 to date)
TGGP writes:

Immigrants have externalities. That is one reason a tariff would make some Pigovian sense. However, different immigrants have different externalities. It is not beyond the government's ability to look at what factors correlate with them. This would permit the "tax" on an immigrant to vary with the expected cost he will have on others. What indicator helps show whether the immigrant will have significant externalities and changes dynamically like the market rather than slowly like the government? Wage rates! That's how the market says what is demanded or "needed" most. They also correlate with education, not committing crime or being on public assistance or having children out of wedlock. The alternative to a skill-based system in the U.S has been a family unification system where the immigrants themselves select their cousins and whatnot without taking into account the costs imposed on Americans. This discourages assimilation and would never be considered in a real guest worker system like in the Gulf states. Encouraging them to have their families here is especially stupid since it is the second and third generations that have the worst crime, dependency and illegitimacy problems.

Floccina writes:

I just want to point out that immigrants have negative and POSITIVE externalities.

Mark Seecof writes:

Yes! Read the whole thing! Russ Roberts says we should exile those of our current citizens who can't muster enough "points." While I assume he just wants to mock an immigration point-system, he inadvertently "points out" the problems with unrestricted immigration: we already have a surfeit of economically and culturally poor people. We need more of them like we need holes in our heads.

(Of course, other countries would likely refuse to admit the Americans Roberts wants to expel. Unlike Roberts, I just want to leave poor people where they are--either inside or outside the USA.)

Let me outline a serious "economically efficient" proposal. Keep in mind that poor American citizens are a kind of "sunk cost," but we can avoid the costs of potential poor immigrants just by permitting them to remain in their own countries.

Suppose we dispense with a complex, bureaucratically (i.e., incompetently) determined "point" system in favor of a truly market- driven, economically- efficient method of selecting immigrants: give a residence/work visa to anyone with a bona-fide full-time job offer paying more than the US 3d-quartile hourly wage[1] (around $23/hour)--IF his prospective employer will post a bond for two years' wages so we can be sure the offer is genuine.[2] We need demand no other positive qualifications, but should retain a few negative ones (no criminal record, no debilitating or communicable disease, no-one from terrorist source countries).

Once his visa is granted the immigrant would file and pay Federal income tax every year, and if his W-2 income did not exceed the US 3rd-quartile wage for seven quarters out of every eight we would cancel his visa and make him leave the country. After ten years he could apply for US citizenship. (To keep unscrupulous employers from abusing immigrant employees, we would permit an immigrant to change jobs freely whenever he (or an employer) posted a new bond, or after two years in any event.)

Since the market, in all its glorious adaptability, would determine which occupations deserved high wages, the market would also choose immigrants under this scheme.

We should admit no poor immigrants. We really do not need immigrants to do low-wage work, since the low-wages offered prove such work isn't very valuable. At the same time, low-wage immigrants (along with their dependents and offspring) cost much more (in government benefits, public-school costs, police/prison costs, housing inflation, etc.) than they pay in taxes.

So how about it, Profs. Kling and Roberts? Should we let the market choose immigrants by offering them high wages? If not, why not?[3]

Why would it be economically-rational to admit immigrants who cannot command wages high enough to keep them off public assistance?

(Seriously--even full-time employment at $7.25/hour pays less than the Food Stamp eligibility limit for an worker with some dependent kids.)

[1] The Labor Department defines an "experienced" worker as one who commands the 3rd-quartile wage in his job category. Measuring visa applicants' wage-offers against the overall US wage profile would enable junior members of high-IQ professions to get visas along with better-qualified workers in less demanding fields.

[2] The bond would be forfeit to the government if the immigrant's visa were cancelled (e.g., for failure to meet the income requirement) before two years passed. If an immigrant surrendered his visa voluntarily (before failing the income test) we would release his bond. That way an immigrant who lost his job could depart (within 3 months) without any penalty.

[3] Of course, American citizens who earn high wages now rationally oppose importing competitors to drive down those wages. Perhaps the best compromise between those who would rather not increase poverty in the USA and those who would rather not drive down their own supra-median wages would be this: admit almost zero economic migrants (only top scientists and entertainers/ sports-stars need apply). When it comes right down to it, that's the compromise I think we could best live with.

Steve Sailer writes:

I believe the Canadians have experiment with visas for the rich without too much satisfaction. One problem might be that you get a lot of wealthy white collar criminals who need to leave their native lands before they get caught. You also tend to get older people who don't have much to contribute to America except money. One purpose of a legal immigration system is to improve the marriage market for ourselves and our posterity by bringing in high potential bachelors and bachelorettes or young couples who will have children.

But, some combination of points and auctions could work well. It's funny how little attention economists have paid to this.

Hi Mark,

I like your idea of a bond system -- I think it would be better than our present system.

However, I think requiring that would-be immigrants have a high-paying job right off the bat would unnecessarily exclude young people. Think of how many companies were started by people either in school or just out of school (Google, Microsoft, etc.)

I would also suggest that immigrants just post a bond once, with the freedom to move between companies from the beginning, without buying a new bond each time.

And rather than make the bond equal to two year's salary, I would make the bond high enough to cover the likely costs of any externalities the immigrant might impose. For example, let's suppose that you set the bond at $1 million. Bail bondsman typically charge suspected criminals a 10% fee. Since most immigrants would not be criminals, we would expect the fee to be lower--say 5%. That would be $50,000. Businesses that wanted to hire immigrants could loan the money to the immigrant, to be paid back out of their salary. Poor immigrants could borrow from family and friends, or banks that specialize in that kind of lending.

If the immigrant committed any crimes, or went on welfare, the government could recover the money from the bond dealers.

Bond dealers would have a big incentive to come up with a way to screen out criminals and deadbeats. The better their screening, the lower the fee they can charge and still be profitable.

eric writes:

Richard Posner has stated that an auction or flat fee would be efficient: say offer citizenship for anyone willing to pay $50k. Raise or lower the price depending on whether we are getting enough.

Mark Seecof writes:

I'm not worried about bright students, because I would still allow (non-immigrant) student visas (though I would enforce their terms, unlike the present Administration). A bright student could get a job offer to qualify for an immigrant visa.

I think we should add advanced age (>50) as a negative qualification for permanent immigration. Still, I would issue sojourn visas to (apparently-non-criminal) rich people (with no right to public assistance of any kind, and a hefty bond to guarantee payment of, e.g., hospital bills). I see no reason to prevent rich people spending money in the USA.

Most of the lesser defects in our present immigration system could be remedied just by enforcing current law--that is, by deporting wetbacks, visa-violators, etc. Of course "birthright citizenship" and "family reunification visas" are the sucking chest wound and compound fracture of the present system (with "lottery visas" as the skull fracture?), but no reform to those can be effective without prevention (e.g., a serious border fence) and enforcement (deportations).

DRR writes:

I'll take the present system, thanks.

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