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Should immigration be family-based?
How should we select legal immigrants? Under the status quo, about two-thirds of new legal arrivals come through family connections; the new immigration bill would (over time) move toward a points system and favor skills. This stimulating article suggests that the change would favor the suburbs and penalize New York City. The city's economic revival depended (and still depends) on immigrant-run, family-connected small businesses. I liked this sentence:
These days, in a Lower East Side neighborhood that has been a cradle of family chain migration to America for 200 years, the deli at Delancey and Allen Streets is a 24-hour operation run by a man from Bangladesh — one of about 70 relatives to follow a Bangladeshi seaman who jumped ship here in 1941.
The focus on skills has many advantages, but might it destroy New York City? In contrast, Northern Virginia, with its high-tech firms, would benefit from the reforms. Los Angeles, which has a higher percentage of illegals, and a higher concentration of Mexicans, stands in a very different position than does New York.
A skills-based system would probably bring more men and fewer women; in many poorer countries women do not have good educational opportunities. If the men are allowed to bring over spouses from the home country, this could mean less assimilation; female arrivals are more likely to marry out of group.
Henry Farrell pointed out that a skills-based system might drive greater "brain drain" in poor countries; in his view America's gain would be the world's loss. Alternatively, by sending their skilled citizens, poor countries might received improved skilled returners, more remittances, and more business connections. Arguably this has worked for India. The new entry requirements also might increase the incentive for third world residents to acquire skills, and of course not all of the skill-seekers will end up migrating. Overall I do not believe the net effect here is known.
If family members are left out of legal immigration, might they have the greatest demand to then come as illegals?
The bottom line: A very big change is in the works here, yet I don't feel I have a good handle on it.
Here is George Borjas on point systems. Comments are open, but please don't rehash the usual debates, try to make new points and please focus on legal arrivals only.
Posted by Tyler Cowen on May 31, 2007 at 06:50 AM in Economics | Permalink
Comments
"destroy New York City"?
You mean like physically, like Godzilla?
What does that phrase mean?
Yeah, high skilled engineers are going to run around with hammers, smashy smashy.
If by destroy, you mean "use their smart brains to earn high incomes and spend lots of money on goods and services", then yes, they'll "destroy" New York.
Posted by: Morgan at May 31, 2007 7:00:23 AM
Skills-based immigration systems are great (disclaimer, I'm a US citizen on a skills-based visa in the UK), but the driver for illegal immigration is a demand for low-skilled labor.
Using legislation to block this demand, which is driven by market forces, will either result in increased illegal immigration, or starving the economy of needed inputs. Trumpeting the points-based system as a solution is just political flim-flammery, it isn't the doctors and engineers who sneak across the Rio Grande to get jobs cleaning walmarts.
Posted by: Kief at May 31, 2007 7:35:46 AM
Canada, like many other countries, uses a skill-based system. Take a six-part test that gives you points for language skills, education, experience in skilled jobs, add in a few more points for having a skilled spouse, having relative in the country, and having an extant job offer. It's relatively easy to see if you make it.
OTOH, as a highly educated and highly skilled Canadian, I was very surprised how hard it is for me to get a US visa. Unless I'm a world-class violinist or basketballer, a firm has to prove that they can't find a qualified American before they can sponsor me for an employment-based green card. However, if I had one US great-grandparent, I'm in, no questions asked. Odd, IMO.
Posted by: bartman at May 31, 2007 8:46:47 AM
I think the mentioned simulation is way off base.
I work in a bulge-bracket investment bank in New York. We are desperate for qualified people. We have had tu turn away many applicants because of visa issues. Even some current high-quality workers have to leave the country as their visas were not renewed.
My firm would pay a bundle to get qualified foreigners in here. New york has PLENTY of room for points-based immigration. The immigrant profile would be very different... But that's the idea, isn't it?
I would go so far as to say the main reason New York is not growing faster is that there is an incredible shortage of qualified accountants, IT folks, finance/operations folks, lawyers, etc. This shortage drives investment elsewhere.
Posted by: Stephen W. Stanton at May 31, 2007 8:49:06 AM
the driver for illegal immigration is a demand for low-skilled labor.
this is nonsense. by definition, demand for highly-skilled labor is higher.
the main reason New York is not growing faster is that there is an incredible shortage of qualified accountants, IT folks, finance/operations folks, lawyers, etc. This shortage drives investment elsewhere.
the limiting factor to New York growing further is local urban rent, not a "shortage" of workers per se. otherwise highly-skilled workers would be incented to immigrate.
Posted by: guest at May 31, 2007 9:07:50 AM
A small-c conservative point in favor of the status quo: families are good. Good for society, good for individuals. They provide a safety net (financial, emotion, etc.). Intact families will be better for America than more higher-skilled workers who are isolated from their families.
Posted by: JWR at May 31, 2007 9:11:07 AM
Isn't the question, then, JWR, what is a "family"?
Does it stop at husband, wife and kids?
Does it stop at siblings and parents?
Does it stop at aunts and uncles and cousins?
Does it stop at...you get the idea.
Posted by: Morgan at May 31, 2007 9:24:14 AM
The city's economic revival depended (and still depends) on immigrant-run, family-connected small businesses.
most of these small businesses are providing local non-tradable services: this looks like a Balassa effect rather than a real dependence.
Posted by: guest at May 31, 2007 9:32:26 AM
JWR: it's not a question of whether people should have family connections or not. it's a question of whether they should be bound to india and live detached from their geographic and political community, or whether they should develop family connections with Americans that also serve to integrate them with loyalties to broader society.
Posted by: Chris at May 31, 2007 10:11:54 AM
A more market based system for managing immigration is a good idea. Some types of immigrants should have to effectively pay to get into a given country, others might be paid. This depends on the usual supply/demand issues that all markets operate under. Currently in the US we have a strange and erratically enforced rationing system and prices are near zero. Clearly there is evidence that low wage workers are willing to pay high personal prices to emigrate here. As clearly for example, we might benefit from a huge influx of skilled medical personnel to lower our health care costs. We might subsidize or waive other barriers to entry for the in-demand workers. Less in-demand workers could be charged a high fee that they could pay over time through additional wage taxes. If these fees/taxes were high enough, perhaps they might decide not to emigrate from their existing country.
For this type of structured system to work, borders would need to be enforced, and existing penalties on businesses who hire illegals off the books would need to be increased to draconian levels and enforced.
Look at Canada which by the nature of it's insistence on skills and financial assets [$400,000] essentially raises the price of citizenship as opposed to implementing rationing. Of course, they don't border Mexico, so their financial problem is much easier - instead they are able let in huge numbers of wealthy Asians.
Posted by: JPC at May 31, 2007 10:17:20 AM
As for Farrell's point, isn't it a net benefit to even the poorest to have their top-skilled labor move to where the greatest capital is for them to complement and use. That is to say, didn't India benefit from the fact that Amartya Sen moved on from Calcutta to Cambridge? Isn't the same true for private entrepreneurs (who often continue to serve their original values, but with greater capital), too?
Posted by: Chris at May 31, 2007 11:19:03 AM
Why must we have one or the other? We are talking about legal immigration after all, and those numbers are not so high to begin with. Why can't we have a policy that allows family migration, and as rational human beings we can define what is a family member, while at the same time have a system that favors skilled, educated workers as the initial anchor member. Educated, skilled foreign labor is sure to be correlated with family membership. This is entirely separate from the issue of illegal immigration which can only be addressed by improved border control and employment regulation enforcement.
Posted by: Yancey Ward at May 31, 2007 11:38:22 AM
How about we allow the markets to decide? Screw the point system, auction off the visas, and allow a secondary market in them.
Some very small technical details would have to be established:
1) Only the owner of the visa can exercise right conveyed by it (to prevent virtual enslavement of immigrants by visa owners).
2) The visa can only be transfered when if it's current owner is either outside the country or has other legal right of residency in the US.
This would cause efficient allocation of visas. If suddenly there were a shortage of a new unexpected type of skill it would require no bureaucratic insight to favor it, the markets would automatically.
Posted by: quadrupole at May 31, 2007 12:24:31 PM
I like quadrupole's idea, but I think it's a nonstarter politically.
What if we used the point system, incorporating family connections, personal wealth, education, communicable diseases, et al, and charged an entrance fee that is inversely proportional to the total point score? That way we wouldn't have to overtly deny anyone entry; poor, unskilled, disease-ridden, orphans could get in, but only by paying an astronomical fee. Meanwhile more valuable immigrants would pay something more reasonable, and the most valuable, the Einsteins, would only pay the cost of processing their applications.
Posted by: Christina at May 31, 2007 2:12:29 PM
I would like to point out that under my proposed market system any charitable organization could unilaterally decide to purchase a visa for someone they think should be a refugee. It also invovles minimal political nonsense.
Posted by: quadrupole at May 31, 2007 2:44:08 PM
Oh... one other interesting point about visas as property... it means that every legal immigrant has a valuable asset in hand that they *can* liquidate to meet obligations. Legal immigrant shows up at the emergency room and racks up a large bill? They can sell their visa to pay it. Legal immigrant wants to finance a startup, they can borrow against their visa to do so. Skilled foreign national with little capital wants to come work in the US? They can take out a mortgage secured by their visa to buy it and come here.
Essentially what I'm proposing is the extension of the miracle of property rights to visas... surely any De Soto fan can see the implications :)
Posted by: quadrupole at May 31, 2007 2:48:48 PM
One obvious distinction that is lost is that the proposed changes would retain "nuclear family reunification" (spouses and minor children) while cutting back on "extended family reunification" (siblings, parents, and adult childre). Although Hillary and Barack have been rattling on about how America is built on family values, the reality is that American culture emphasizes nuclear families (e.g., Ozzie and Harriet), and is quite suspicious of extended families (e.g., the Corleones).
Extended family reunification has been bad for low-skilled Americans, especially African-Americans, who have very little chance to get hired by by nepotistic immigrant entrepreneurs, who would rather import their low-skilled relatives. As you travel about the country, notice how few American blacks work in immigrant-owned businesses versus how many African-Americans work in big national chains (e..g, Hertz, Marriot, Ruby Tuesday, etc.)
Posted by: Steve Sailer at May 31, 2007 4:25:50 PM
Of course, driving African Americans out of New York City and replacing them with more docile immigrants has been long one of the covert reasons for the media enthusiasm for the current immigration arrangement.
Posted by: Steve Sailer at May 31, 2007 4:28:31 PM
A more market based system for managing immigration is a good idea.
No immigration proposal I've heard of is market based, there is no price system involved. It's basically whether you choose to cherry pick highly educated talent or accept lower skilled labor in the hopes that future generations will take advantage of the opportunities afforded them. I don't see much point in wishing for an option that's not politically viable.
Currently in the US we have a strange and erratically enforced rationing system
True and I suspect this is an aspect of the issue our hosts would prefer we stayed away from in comments. At any rate, this aspect has more to do with peculiarities of US history than anything else.
That is to say, didn't India benefit from the fact that Amartya Sen moved on from Calcutta to Cambridge?
Interesting point and actually leading into what I would like to say which is that in modern society the kind of elites proponents of the skill point system hope to attract may actually have closer ties their home country than current immigrants and in the long run be less of an economic stimulant if you're worried about economic entities bounded by national borders. As a child of skilled immigrants (both parents with graduate degrees) whose parents have gone back to the Old Country, I suspect we'd start hearing stories of immigrant investment bankers and research scientists who banked their American paychecks, built a McMansion back in the old country and take their skills back with them after a decade or two to enjoy the benefits of the generally lower cost of living. It's already happening with some Asian immigrants who put may put in a post-doc or five years in industry after studying at an American institute of higher education then high tailing it back to Singapore, Hong Kong, Taiwan, Hyderabad, Bangalore etc. to work for Infosys, TMSC etc. They do contribute to the US economy but the magnitude of the rate at which they contribute is mitigated by the duration for which they do so.
Like most of the comments here this is mostly anecdotal evidence, but what academic research I've seen seems to say the win for immigration comes from the second and especially third generations who tend to have higher earnings than their parents and often higher earnings than their native age-mates.
To return to the anecdotal evidence, it makes little difference to a Hong Kong billionaire whether their primary residence is in Vancouver, London or Geneva their investments are made worldwide and their personal consumption likewise is spread globally.
Posted by: Ssezi at May 31, 2007 4:51:47 PM
The current system is so screwed up that a registered nurse in this country on a student visa can't get a job at graduation. How dare we complain about medical costs while not renewing the Schedule A nurse visa quota. Bill Gates is mad, too. He can't get his foreign geeks anymore. If you think Americans are lined up for these jobs, you're mad. Meanwhile, most nurses are reaching retirement age. Hospitals pay extra to keep them on as long as possible. What choice is there? It's the perfect storm... and all you can talk about is illegals. America's lost. And one draft of "comprehensive immigration reform" does NOT raise the Schedule A quota. HOW MUCH DO YOU WANT TO PAY FOR YOUR MEDICAL CARE? HOW MUCH DO YOU WANT TO ERODE OUR SOFTWARE AND TECHNICAL COMPETITIVENESS? Retards! Build your fence! Hack out some illegals policy. JUST EFFING GET TO WORK PROMOTING LEGAL SKILLED LABOR IMMIGRATION.
Posted by: John at May 31, 2007 5:36:07 PM
1. The National Research council 1995 analysis was clear: low skill immigration fiscally horrible for the US, high skill immigration fiscally good. (Medium skill was also a net positive, although they might underestimate the use of services).
2. If you really believe in markets let’s use them. Auction 1 million visas per year, to the highest bidders. Allow yearly down payments if you like. Let underlying factors decide if family is better or skill. If the Bangladeshi entrepreneur wants his “hard working” brother and his family that’s fine, let him pay for it.
You win twice. More money to the US taxpayers, and self selection.
The libraltarians that are fighting to import a new underclass are of course free to chip in themselves and buy visas for all the high school dropouts you want.
Ps.
Family and skill are NOT necessarily dichotomous. The correlation is obviously high, both between parents and children, sibling and spouses. I would guess most of the German I-bankers could bring their family over through skill visas, eventually.
Why is Cowen assuming there is a tradeoffs? Probably because he acknowledges that the immigrant groups that are mostly geared towards chain immigration and large extended clans (“families”) also tend to be the low skilled ones. (I guess Asians and their old parents is the exception).
What should that tell us about the ability to assimilate?
Posted by: Tino at May 31, 2007 5:49:17 PM
“Retards”
If there is a “shortage” of any groups there is this amazing new invention that at most in a few years fixes the problem. It’s called the price mechanism. Google it.
Posted by: Tino at May 31, 2007 5:55:28 PM
There's another concept that economists should Google called "opportunity cost." The current system of letting foreigners in on nepotistic grounds costs American-born citizens an enormous amount of money in opportunity costs. If the market price of a green card was, say, $100k, then selling a million green cards a year adds up to $1 trillion per decade in opportunity costs.
The market value might well be higher.
Posted by: Steve Sailer at May 31, 2007 6:03:29 PM
Here in Australia immigration is based on skills (and a small number of humanitarian visas are issued) point system. The same is true in Canada and New Zealand. No tendency toward mostly male migration as Tyler posits. Close exmaination of the Canadian, Aussie and NZ situation is warranted. It would be interesting as there are now 25,000 latino immigrants in Alaska if any have made the move to Canada along the way. Seriously, if immigrants are willing to move to alaska why or why not or who and why moves to Canada--difference woul be policy toward immigrants as its a rich country etc....Good empirical study there!
Posted by: Robert Cavazos at May 31, 2007 9:48:30 PM
Robert:
Few Latinos would be eligible to move to Australia. They don't have the education to compete with the European and South East Asian immigrants to Lebanon, and obviously don't have any humanitarian excuse other than being middle income in the world.
About 10% of the Mexicans have moved to the US, yet Mexico does not even show up among the top 20 origin countries for Australia!
The 75.000 or so Lebanese to Australia (and to a lesser extent those from Vietnam) demonstrate the cost of emotion driven "know-nothing" pro-immigration. Mainly let in not based on skill, but humanitarian grounds. Lebanese are less than 2% of the immigrant stock, but cause a huge share of the problems, regarding crime, cultural clash, unemployment etc.
Posted by: Tino at May 31, 2007 10:53:15 PM
