Dean Bruner wrote a terrific blog post ‘The Case for International Students’ yesterday highlighting the advantages of a diverse student body at Darden with students born in many different countries. While I agree with his arguments, I’d like to add more color to one of the motivations the Dean highlights behind recruiting international students namely, “(international students) found companies and create jobs (in the U.S.).” Despite the statistics and measured contribution of skilled immigrants, U.S. immigration policy makes it an arduous process for these students to start their own firms and for companies to hire them after they have been trained in the best U.S. universities. I hope I can add some insight that will be informative as readers contemplate the ongoing immigration reform battle on Capitol Hill. Note: I had published a similar version of the post below in which I made for legal immigration reform in the National Review.
More than 30% of the scientists and engineers in Silicon Valley who have helped America stay at the cutting-edge of technological innovation are foreign born. One-quarter of the Americans who have won Nobel Prizes have been immigrants, even though immigrants comprise just one-eighth of the U.S. population. Therefore, an immigration policy that attracts skilled workers can help provide American businesses with the highly productive workers they require.
Much research, however, has been focused on the detrimental effects of illegal aliens, including lower wages for native workers that compete with low-skilled immigrants for jobs, and higher tax burdens on Americans who pay for public services. These economic factors combined with Congress’ sluggishness on passing a comprehensive immigration reform bill given its distraction with issues like Syria have stalled solutions like the DREAM Act that grants legal status to unauthorized aliens.
However, legal immigration policies for permanent and temporary visas must be reformed because, unlike low-skilled, illegal immigrants that come to the U.S. surreptitiously, high-skilled, legal immigrants boost the competitiveness of the U.S. economy and increase the flow of capital into the nation. In addition, these workers would be well paid and therefore would add to government revenue by paying more in taxes than they would receive in government benefits. A greater proportion of high-skilled workers in the labor force also would lead to an increase in the demand for low-skilled employees, thereby decreasing both poverty and unemployment.
For the past several decades, the Family Reunification Act has defined U.S. immigration policy. Visas have been allocated on the basis of family ties to a U.S. citizen. From 1999 to 2008, only 15% of the approximately one million legal permanent residence visas issued were employer-sponsored. America’s failure to reform immigration policy has caused the U.S. to lose ground to Canada and Australia, for example, which have altered their immigration criteria to attract high skilled rather than family-based immigrants.
The situation is no better with temporary visas granted for business and employment purposes. Decades of overregulation and micromanagement by the government have led to almost one hundred different categories of visas with complex rules and high costs. For example, firms pay government fees in the range of $2,500 to $4,500 for every employee they petition to hire on an H-1B (temporary work visa for skilled professionals), in addition to bearing the cost of delays in hiring and attorney fees of several thousand dollars. This affects the competitiveness of U.S. firms, particularly smaller ones, as emphasized in a recent Government Accountability Office report: “Small firms were more likely to fill their positions with different (that is, less suitable) candidates, which they said resulted in economic losses, particularly for firms in rapidly changing technology fields.”
There is a lot of evidence to show the benefits of a skills-focused immigration policy. Volker Grossmann and David Stadelmann used data from thirty OECD countries to demonstrate that high-skilled immigration increases public expenditure for productive uses like education, roads, railways and electricity. This leads to an increase in the marginal product of capital and boosts the incentives for investment in both publically financed infrastructure and private capital.
The benefit of legal immigration policies that place an emphasis on attracting skilled workers is also emphasized in the research of Sarit Cohen-Goldner and Yoram Weiss. Their work highlights that public investments in Israel increased after waves of high-skilled immigrants entered the country. Additionally, they also found a gradual transition from blue-collar to white-collar occupations in the workforce. Moreover, the benefits don’t stop with the highly skilled immigrant-immigrants’ children are also often exceptional contributors to society as Alex Nowrasteh highlights here.
So how should we reform America’s legal immigration system so that the U.S. remains the destination of choice for the best and brightest in the world? There are several policy prescriptions suggested by reformers, but my favorite is Pia Orrenius and Madeline Zavodny’s pro-market strategy outlined in their book Beside the Golden Door. They recommend an auction process in which the government sells permits to employers to hire foreign workers. Revenues raised from the auctions will allow the government to compensate any parties for costs imposed by this freer immigration policy. To prevent abuse, workers will not be tied to a particular employer and will have a clear path to citizenship that should be an incentive for them to invest their savings in the U.S. instead of back home.
While this blog post doesn’t directly relate to life at Darden, I hope it’s helpful to my current and prospective classmates as you all think about a highly sensitive issue like immigration. In my opinion, research has clearly highlighted the fiscal benefits to a nation of an efficient immigration system. And Dean Bruner has done a good job highlighting a lot of the intangibles that international students bring to a school/classroom before they even join the workforce so do check out his post here.