Category Archives: Immigration

"English football needs fewer English footballers"

I haven’t examined this issue at all, but Chris Cook tells a plausible story:

Britain’s Home Office operates a surprising policy: helping Manchester United, Arsenal, Chelsea and Liverpool to dominate football’s Premier League whilst also inflating footballers’ wages, so pushing up ticket prices. These all flow from its ill-considered immigration rules.

This would not be such a problem if the government were to confine its attention to the beautiful game. But, now, it is applying the principles that inform its immigration rules for footballers more widely. Under its newly-tightened system, companies can hire non-European staff only if they meet thresholds for skills and training to enter the country.

In football, the rules have long allowed non-Europeans to play professional football in the UK only if they have played internationally, representing a country whose national team is in the world top 70. Rich teams, such as Chelsea, can improve their midfields by hiring Brazilian World Cup winners.

But poorer teams near the bottom of the Premier League cannot shop in that market. For the most part, they are stuck with what they can scrape together from Europe. The result is that weaker teams suffer, particularly when trying to fill specialised positions – good left-backs are rare. In addition, since lousy European players do not face competition from similarly lousy non-Europeans, their wages are driven up. So, as well as making the league competition less intense, these restrictions on the supply of workers help to pump up ticket prices for ropey teams.

"Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes"

NBER Digest:

Ethnic discrimination may explain a significant part of why recent skilled immigrants have much poorer prospects than non-immigrants in the Canadian labor market. In Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes (NBER Working Paper No. 15036), Philip Oreopoulos estimates the effect of various individual attributes on the likelihood that a job applicant will receive an interview request. He finds that interview request rates for English-named applicants with Canadian education and experience were more than three times higher than for resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent) — but they were no different than for foreign applicants from Britain. Employers also valued experience acquired in Canada much more than experience acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. And, among resumes listing four to six years of Canadian experience, whether an applicant’s degree was from Canada, or whether the applicant obtained additional Canadian education had no impact on the chances for an interview request.

Canadian applicants who differed only by name had substantially different callback rates: those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). The “discrimination” was particularly pronounced in administrative, finance, and retail jobs.

Most immigrants come to Canada on a point system, which attempts to attract the most educated and experienced foreign employees, who are in demand by the industry. However, for a given level of education, the earnings gap between recent immigrants and natives is more than 50 percent. To try to understand this, Oreopoulos sent out over 6000 mock resumes to job postings in Toronto, all of which required an undergraduate degree and several years of work experience. The job postings came from a range of industries, and the mock resumes were carefully designed to reflect actual resumes supplied by recent immigrant and Canadian native job hunters. Oreopoulos randomly assigned each applicant a common Chinese, English, Indian, or Pakistani name, as well as either foreign or Canadian education and work experience and other applicant characteristics. By doing so, he was able to investigate the effect of particular attributes on an employer’s decision to call an applicant back for an interview.

Oreopoulos further finds that the evaluators’ gender and ethnicity were not driving the differences in callback rates: in fact, evaluators with Asian or Indian accents and names were slightly more likely to call back an applicant with an English name. He concludes that, for resumes listing more than five years of experience, “an applicant’s name matters considerably more than his additional education, multiple language skills, and extracurricular activities” in the Canadian labor market.

The H1-B constraint no longer binds

Michael Clemens wanted to study the effects of the H1-B visa lottery. But there may be no lottery this year:

For the first time in several years the H1B visa programme, once the most sought after among Indian professionals, is unlikely to reach its cap of 65,000 before the start of the 2010 fiscal with nearly 20,000 slots lying vacant thanks to the tattered US economy.

The US Citizenship and Immigration Services said it has received approximately 49,000 H1B petitions till August seven counting toward the Congressionally-mandated 65,000 cap, more than four months after it started accepting applications for visas for the 2010 fiscal begining this October.

This is in contrast to the previous years when the USCIS had to resort to computerised draw of lots as it received petitions outnumbering several times more than the Congressional mandated cap of 65,000 within the first few days after it started receiving H-1B applications.

What is the distributional impact of low-skilled immigration to the US?

Dani Rodrik argues that maximizing the gains from trade liberalization should involve considerations of (1) efficiency, (2) second-best imperfections/externalities, and (3) distributional impact.

Rodrik argues that we should not prioritize liberalization of unskilled immigration to the US because it may cause “adverse movements in income distribution.” Unfortunately, Rodrik does not define what constitutes an adverse distributional effect.

I assume that Rodrik would not oppose a Pareto improvement that raised the real income of every member of the population but yielded disproportionate gains to the rich and therefore worsened the Gini coefficient (or other measures of distributional skew). Presumably, the concern about the distributional impact translates into something like a social welfare function that gives greater weight to the less well-off.

But allowing more low-skilled migrants to enter the United States would produce massive gains for those laborers. And immigrants from developing countries are frequently significantly poorer than low-skilled American workers. Significantly improving the welfare of those who are less well-off due to being born on the wrong side of an arbitrary line strikes me as a desirable distributional shift from a global perspective.

Interestingly, Rodrik has previously said that he is closer to Lant Pritchett than George Borjas on immigration:

George thinks the purely national perspective is the right one, and he figures the aggregate gains for the U.S. are small relative to the distributional costs, which makes this bad policy.  For my part, I believe cosmopolitan considerations should enter our calculus when the gains abroad (or to foreign nationals) are sufficiently large, which they would be with temporary labor flows.

So why does Rodrik now want to make low-skilled immigration liberalization a lower priority because it would make domestic unskilled workers worse off?

Temporary migration and trade flows

The WTO’s Marion Jansen and Roberta Piermartini latest in the World Economy:

Using a gravity approach in our empirical analysis, we find that temporary migration has a positive and significant effect on trade and that temporary migration tends to have a stronger and more significant effect on both imports and exports than permanent migration. Interestingly, the role of temporary migrants in reducing trade costs does not appear to be associated with their skills.

Immigration is a necessary component of a realistic utopia

In The Law of Peoples, one of his last works, John Rawls sketches a normative theory of international relations amongst decent and liberal nations. He does not discuss immigration and defends his omission by saying that it would not be relevant in an ideal society:

There are numerous causes of immigration. I mention several and suggest that they would disappear in the Society of liberal and decent Peoples. One is the persecution of religious and ethnic minorities, the denial of their human rights. Another is political oppression… Often people are simply fleeing from starvation… Yet famines are often themselves in large part caused by political failures and the absence of decent government. The last cause I mention is population pressure in the home territory, and among its complex of causes is the inequality and subjection of women. Once that inequality and subjection are overcome, and women are granted equal political participation with men and assured education, these problems can be resolved… The problem of immigration is not, then, simply left aside, but is eliminated as a serious problem in a realistic utopia.

I find this passage deeply unsatisfying. Neglecting discussion of immigration by saying that it would not be relevant if the entire world were a decent (or ideal!) society strikes me as manifestly unhelpful. Even if the long-run steady state of ideal societies might result in little concern for immigration policy, immigration between decent and indecent societies would likely be a significant determinant of the transition dynamics to the realistic utopia. Surely liberal societies ought to have concern for immigration policy in this context.

But such thought experiments and omissions might be entirely appropriate in political philosophy. It’s not my field, so I do not know its assumptions and techniques. For the sake of argument, concede everything that Rawls says above and contemplate the “realistic utopia” condition. Rawls is still wrong.

Why? Economic geography! In a world of increasing returns and agglomeration economies, it makes no sense to keep people trapped within historically-produced arbitrary boundaries. It massively decreases human welfare. We want people to be free to gather in densely populated areas and reap the gains of more complex and frequent human interaction. We also want them to move freely to respond to geographically idiosyncratic shocks. People are a resource and borders impose transaction costs that impede allocative efficiency.

For thoughts along these lines, see Lant Pritchett’s “Boom Towns and Ghost Countries.” With labor mobility, there are countries that would become “ghost countries” akin to ghost towns. But due to immigration barriers, there are instead “zombie countries” populated by “human beings, who through no action or fault of their own, are trapped in economically non-viable regions.” Ghost countries are preferable to zombie countries, even in a world governed by “liberal and decent Peoples.”

The ridiculous inefficiency of migration barriers

Michael Clemens, Claudio E. Montenegro, and Lant Pritchett (2008). “The Place Premium: Wage Differences for Identical Workers across the U.S. Border.” Center for Global Development Working Paper 148.

Are your wages determined by what you know, or where you live? This paper compares the wages of workers inside the United States to the wages of workers outside the United States. Comparing wages alone isn’t enough, because workers in (say) Bolivia could differ from workers in the U.S. in many ways—some of them easily observed, such as their level of education, and others less easily observed.

A rich new dataset on over two million workers around the world allows the analysis to control for several observable factors besides location that might affect wages, notably including country of birth and country of education. But just because a Bolivian in the U.S. is identical to a Bolivian in Bolivia by these observable measures, these two workers may not be identical in all ways: one of them was willing to move and incur the various costs of doing so, and one of them might differ from the other in unseen ways, such as risk-tolerance or entrepreneurial spirit. The paper uses several independent methods to estimate how such differences might bias its estimates, including new data on who what kinds of people choose to emigrate from nine different developing countries.

Following all of these adjustments the paper estimates that the wages of a Peruvian worker willing to work in the United States are about 2.6 times as much as the same person would make in Peru. This figure for Peru is typical among the 42 developing countries analyzed, but for some it is much higher. For Filipino it is around 3.5, and for a Haitian it is over 7. In other words, a Nigerian moderately-educated adult male urban formal-sector wage worker who moves to the U.S. increases his wages by several hundred percent.

The implications of these enormous differences are profound: (1) these gaps represent one of the largest remaining price distortions in any global market; (2) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination, typically much larger than wage discrimination based on ethnic group or gender within spatially integrated labor markets; and (3) these gaps imply that simply allowing labor mobility can reduce a given household’s poverty to a much greater degree than most known antipoverty interventions inside developing countries.