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Visa auctions - King Rat
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Visa auctions

So I’m reading Nariman Behravesh’s Spin-Free Economics (which isn’t). In particular, I’m reading the section on immigration. Behravesh is decidedly pro-immigration. I tend to be middle of the road here, neither falling in with the conservative camp railing against immigrants stealing jobs, nor with the liberal camp that bemoans the poor treatment we give illegal immigrants. Put it another way, I don’t have enough information really to come to any really good opinions about immigration.

I guess the way I’ve been trending in my political thought in the last few years is towards a sort of free-market liberalism. In other words, finding market based solutions for problems that the country faces. I still favor government intervention, but in such a way as to align that intervention with how people naturally behave. I don’t believe markets are magic. Any serious look at the economics of health insurance shows there’s a huge disincentive to that market working properly. But using the free market can have huge benefits. Carbon taxes or an auction based cap and trade system for reducing greenhouse gases, for instance.

Back to the immigration thing. Our current immigration policy essentially allows large numbers of low-skilled immigrants and very few high skilled immigrants. While there’s lots and lots of bloviating about illegal immigrants, there’s very little that’s done about it in comparison to the number of people that are illegally here, though what’s done is fairly harsh. Illegal immigration is largely composed of low skilled immigrants.

High skilled immigrants, like doctors and economists and journalists and programmers, is very limited. Illegal immigration for these kinds of people is much lower. Legal immigration is also limited. But if we put high skilled employees in direct competition with people who are willing to work for less, the benefits to the average American would be much greater than low skilled immigrants. Bringing in one doctor who is willing to work for 10% less than American doctors will help the average American far more than 10 additional minimum wage landscapers.

So how to do that? The thought that occurred to me as I was reading was an auction. Set the number of people allowed to enter the country legally at a fairly high, but limited number, say 250,000 or 300,000 per year. Then auction off those slots. Use the money to help fund job training for those displaced, and for additional safety net protections that conservatives complain about. I.e., they complain about immigrants using welfare. Well, use these visa auctions to fund welfare for immigrants.

The economics of it would favor high skilled immigration, but not cut off low skilled immigration if the number allowed in is set high enough.

At the same time, I would drastically reduce the paperwork necessary to immigrate this way.

Obviously, I can’t have been the first person to think of this. On returning home, a quick search brought up some academic papers relating to the idea. And something on the Becker-Posner Blog, which I generally avoid because Richard Posner is annoyingly a hack in areas outside his expertise. But nothing I could find that was written for a non-economist that discusses both pros and cons.

Cross-posted from King Rat

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