Bryan Caplan  

Naik on Credentialism and Immigration

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Occupational licensing is bad, but doesn't explain the financial rewards of seemingly useless education.  Except, Vipul Naik points out, for foreign workers.  Here's Vipul, reprinted with his permission:

I think Bryan is broadly correct that government regulations in United States employment law do not explain the importance that employers give to educational credentials in the labor market. However, for foreign-born seeking employment in the US labor market, it seems like educational credentials are given strong preferential treatment in official US immigration law.

To take the example of the H-1B law:

(1) People with masters degrees from US universities are eligible for 20,000 cap-exempt slots per year for the H-1B quota (for Form I-129). So having a masters degree from a US university significantly increases your chances of getting the visa, since you are less likely to need to play the lottery.

(2) People with masters degrees (not necessarily from US universities) are exempt from additional attestations (about displacement of US workers) on the H-1B LCA that apply to H-1B-dependent employers and willful violators.

(3) Having a bachelor's degree is not a strict requirement for getting a H-1B; work equivalency can be used in lieu of educational degrees. But the work equivalency criterion is skewed against work: you need 2 or 3 years of work experience to make up for 1 year of education.

(4) Nonprofit research institutions are exempt from the annual H-1B caps and also from some parts of the H-1B fees. Therefore, universities and research centers find it much easier to hire postdocs, assistant professors etc. on H-1B than private firms.

Other examples of laws favoring educational credentials: EB-1 and O-1 visas are easier to get based on academic accomplishment (papers, etc.) than based on comparable accomplishment in the non-academic world (this is a subjective assessment). Also, options like Academic Training (for J status holders) and Optional Practical Training/Curricular Practical Training (for F and M status holders) are only available to people after they have spent some time studying in a US educational institutions.

While employers probably are naturally more inclined to hire people who are studying in US universities, and therefore people have an incentive to go to US universities in order to place with companies, I think these laws further bolster credentialism. In particular, I think the effect of these laws is clearest on Masters degrees, where applicants often pay a significant share of their tuition (Ph.D. applicants generally choose the US more because of the quality of the research at universities, though the potential for a better labor market is probably a contributing factor).


COMMENTS (2 to date)
ThaomasH writes:

Occupational licensing is an important impediment to immigration by doctors. I have relatives that immigrated to Spain over the US not for language, but because of certification.

matt H writes:

You may not know but since universities are exempt from h1-b caps, you can buy h1-b workers from them.

So we don't pay our workers, we pay the university and those workers show up and code for us. I assume the money gets passed along, not sure what the university's cut is, or it their is one, not my department. I have had meetings with the school about about getting more workers from them, which they tell me they can do, and its much cheaper and less luck based then the regular h1-b program.

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