Alien arguments

It’s again that time of the year when some people fill out a lot of forms and everyone gets mad at the government. No, it’s not taxes; it’s the visa program for skilled workers.

April 1st marks the beginning of the annual application period. The government sets a general quota of 65,000 H-1B visas, plus 20,000 for people with a graduate degree from a U.S. institution. Last year over 100,000 applications swamped the immigration service on the very first day. This year people are expecting an even bigger excess demand. A lottery will decide who gets to live and work in the U.S.

Over the next two weeks we shall witness a repetition of last year’s debate. On one side, businesses and pro-immigration groups advocate lifting the cap. Skilled labor, they say, gives the U.S. an edge in high human-capital sectors, particularly science and technology, and contributes to faster growth. The country should, therefore, welcome as much skilled labor as employers will bear. On the other corner, some professionals in the IT industry and protectionists would like to restrict the hiring of foreigners, if not kill the program altogether. Their main complaint is that employers just want to hire foreign computer programmers and engineers on the cheap.

I have been indoctrinated to believe in the virtues of the free movement of goods, capital and labor. But if we’re going to make any progress in this quarrel, both sides should come clean. Free-traders must acknowledge that immigrants will lower wages in some sectors; some Americans will lose their jobs to foreign nationals. And any system is susceptible to abuse from greedy employers. Failing to mention the negatives does little service to the cause. And simply stating that “the country is better off on the whole” won’t cut it.

Protectionists should accept that the job market is not always a zero-sum game. In many instances, a job “lost” to a foreigner generates several other complementary positions, whether horizontally or vertically. Immigration detractors must also admit that, if skilled people don’t move in, capital and entire companies will move out. Don’t forget that Canada and the UK, just to mention two close rivals, have much friendlier immigration policies than the U.S.

Evidence of the effects of immigration is tenuous, which keeps skepticism alive. For example, a 2007 study by Ottaviano and Peri reported that immigrant and native workers are not perfect substitutes within skill groups —their study included all education levels. Their conclusion, another paper discovered, hinges on a disputable assumption, and has been promptly proven wrong. (George Borjas briefs us in his blog. The paper also provides a short review of the literature on the substitutability of immigrants and natives.)

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