Selling Work Visas: Auctions or a Tariff?

The post was originally published at the Cato@Liberty blog here and is reproduced with permission from the author.

Yesterday Professor Giovanni Peri presented an immigration reform plan that would auction work visas to employers. As I wrote yesterday, Peri’s plan would diminish the misallocation of current visas but not do much to increase the quantity of work visas. Since the real problem with America’s immigration system is a lack of work visas and green cards, Peri’s plan seeks to solve a rather miniscule problem by comparison.

Proponents of selling visas either support auctioning a limited number of visas to the highest bidders or establishing a tariff that sets prices but allows the quantity to adjust. An immigration tariff is far superior to an auction of numerically limited work visas. You can read my proposal in more detail here or listen to me explain it here. ADDED BY OPEN BORDERS: For a background on immigration tariffs, see here.

Here are three reasons why an immigration tariff is better than an auction:

  1. A tariff is the most market friendly way of restricting work visas. Limiting the government’s role to setting the price of work visas, allowing the purchased quantities to adjust, would make for a much more market-friendly and flexible system. A tariff would decrease immigration relative to open borders, but misallocation isn’t a big concern because immigrants with the most to gain would pay the tariff.
  2. An immigration tariff is more economically efficient because the quantity of work visas would adjust to market demand unlike an auction of numerically limited work visas. When there is economic growth more people would buy work visas to keep pace with labor demand. In slow economic times the number of visa purchases would automatically shrink. With an immigration tariff, there is no need for a government commission to somehow figure out how many are demanded. They can just set the price and let the market figure out the quantity.
  3. An auction system will not do much to diminish unauthorized immigration going forward. An immigration tariff allows immigrants, temporary workers, American businesses, and families to plan ahead, save, borrow, and pool resources to pay the tariff. Tariff prices will change, no doubt, but they won’t change all of the time as they would under Peri’s system. An auction would provide less price certainty, fewer guarantees of entering legally, and incentivize more unauthorized immigration than a tariff.

5 thoughts on “Selling Work Visas: Auctions or a Tariff?”

  1. The idea of auctioning a Work Visa flusters me. It is not only unfair for those looking for work in the United States, but unethical as well. As stated in the article, this would create a market for demand of work visa’s. When there is slow or no economic growth, people will be inclined to stir away from such auctions because they see no benefit on their side. It would subsequently create an odd flow of immigrants pursuing work in the States. Not only would it cost more for people to obtain, these Work Visa’s will be looked at as a gamble, rather than the fair opportunity lending nation that we claim to be.

    An immigrant tariff would be a wiser course of action because although it looks like “citizenship for sale” it would evaluate immigrants by their stability to assure reason for pursuing our country for work. It would place a higher guarantee on the worker becoming an asset to the country to help grow economically. The money that is made from this tariff is higher than desired by incoming workers but will go towards the debt, which is a good thing. It would also be great for them because it would go towards funding a tax cut that would work to their advantage.

  2. I agree that a tariff approach would be better than an auction approach. But even an auction approach would be an improvement over bureaucratic discretion, as practiced today. Possibly an auction mechanism could be a helpful step towards an eventual immigration tariff (which I call “open borders” although some think the term should only apply to the case where immigrants can enter freely and at once be on equal terms with natives, which I would vote for if it were proposed but which seems even more politically infeasible than the quixotic program I outline in Principles of a Free Society).

  3. Your Excellency, I am glad you posted this leettr because it shows that you care for addressing this important issue. I feel although the procedures are important and needed, it is sometimes frustrating for students in particular to have their visa applications declined. Sometimes the reason is the failure to properly understand the required documents and the lack of finding anyone to advise the applicants on what is missing.I am sure over all the team is doing a good job and I wish everyone a Merry Christmas and a very Happy New Year

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