Selective immigration policy: will it work?

Timothy Hatton 14 February 2008

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It is widely believed that Europe admits too many low-skilled and too few high-skilled immigrants. For more than a decade, immigration researchers have championed the idea that the countries of the EU should adopt the kind of immigration points system for which Australia and Canada are famous. Britain and France have already taken steps in that direction. And last October the European Commission entered the fray when it unveiled a Blue Card scheme, along the lines of the US Green Card, with the aim of attracting highly skilled immigrants.1

Building skill selection into immigration policies seems to be an idea whose time has come, as I noted in my July 2007 Vox column explaining the trend. The question now is: will it work? Will skill- selective immigration policies improve the skills of immigrants as much as European policy makers hope and expect?

Skilled migrants

The Table below summarises a key piece of evidence in favour of selective immigration policies. The first column of figures shows, for a number of OECD countries, the percentage of the immigrant stock in 2001 that was educated to tertiary level. Nearly 40 percent of Australian and Canadian immigrants are tertiary educated while continental European countries languish at around 20 percent or less. Particularly telling to some observers is the comparison between Canada, which has a points system, and its neighbour the United States, which does not.

Host Country
Percent of foreign-born tertiary educated
Adjusted percent of foreign- born tertiary educated
Australia
37.9
33.1
Canada
38.0
32.2
United States
25.9
22.8
Austria
11.3
20.0
Belgium
17.4
24.2
Germany
14.9
17.4
Denmark
19.4
27.6
France
18.1
18.7
Great Britain
30.5
33.0
Italy
12.2
25.9
Netherlands
17.6
20.6
Spain
21.8
24.8
Sweden
22.3
26.8

Source: Belot and Hatton (2008) Table 1.

But things are not quite that simple. For example, 30 percent of US immigrants are Mexicans with low average education, while Canada has relatively few Mexicans. The composition of immigrants by source may itself be influenced by selective policy, but for the most part, this is due to location (as with Mexicans in the US) or colonial heritage (as with Indians and Pakistanis in Britain).

The second column of the Table applies the proportion of high-educated emigrants to the OECD as a whole from each source country to the weight of that country in each destination’s immigration. If the figure in the first column exceeds the figure in the second column then the destination country selects relatively high-educated immigrants given its source country composition. Notice that the gap is positive for Canada and Australia and negative for the leading European countries (but not the US). Policy might be one reason why some countries select more highly skilled immigrants. For example, Abdurrahman Aydemir (2003) finds that, for migration from the United States to Canada, the highly educated are less likely to apply but more likely to be accepted through Canada’s point system to such a degree that the skill-selective policy outweighs the incentive effects that would otherwise favour low-skilled migration. But there are other factors that may also induce high-skilled migration.

What attracts highly skilled immigrants?

In a recent paper, Michéle Belot and I modeled the economic and non- economic forces that drive immigrant selection by education (Belot and Hatton, 2008). We found that economic incentives work: the higher the return to skill in the destination and the lower the return to skill in the source country, the more highly educated the migration stream. We also found that the poorer the country, the more educated are its emigrants relative to the population from which they are drawn. Poverty seems to trump policy in selecting highly educated immigrants from the third world.

Our analysis also revealed that immigrants are more positively selected by education the greater the distance between the source and the destination. And, not surprisingly, past colonial links are associated with negative selection from the source country. Curiously, having a common official or primary language is associated with positive selection while linguistic proximity (between two different languages) is associated with negative selection.

Once we allow for the influence of economic incentives, poverty, cultural and historic links, the remaining differences in immigrant selection between destination countries should reflect differences in policy. But these ‘policy residuals’ do not correlate well with what we know about immigration policies in different countries. They seem instead to reflect past trends and migration choices that are not easily captured by aggregate variables. The very fact that policy effects are obscured in such cross-country comparisons suggests that they cannot be very strong.

The power of policy

Perhaps selective immigration policy is simply not worth the candle. Bur before we jump to that conclusion we need better evidence on the effects of changes in policy. A good example is the change in the Australian points system in the late 1990s that gave even greater emphasis than before to educational qualifications, language ability and recent labour market experience. The evidence from this policy experiment indicates that the reform perceptibly improved the skills of immigrants. And as a result, labour market participation rates were higher and unemployment rates were lower for immigrants admitted after the reform (see Cobb-Clark and Khoo, 2006).

But beefing up the skills criteria for admission will typically have modest effects, as most of those entering through employment streams are well qualified anyway. More importantly, employment-stream immigrants (those who would be subject to a skills test) are only a small proportion of all immigrants. In Europe (as in the US), the overwhelming majority of immigrants come through family reunification or as refugees. For most countries a radical shift towards employment-based immigrants is limited by international treaty obligations towards protecting families and providing sanctuary for refugees. So raising the share of employment-based immigrants up to the Canadian level (about half) would imply significant increase in total immigration – something that would make policy makers think twice.

The bottom line is that adopting more skill selective immigration criteria (and applying them to a larger share of immigrants) is a move in the right direction. It is likely to lead to some improvement in the skills of immigrants and in their labour market performance. Over time it might also take some of the heat out of the immigration debate, as it has in Australia and Canada, where immigration is less controversial despite the fact that immigrants are a much larger share of the population. But it will not transform the immigration landscape, nor will it happen overnight. So let us not expect too much too soon.

References

Aydemir, A. B. (2003), “Are Immigrants Positively or Negatively Selected? The Role of Immigrant Selection Criteria and Self-Selection,” Statistics Canada: Unpublished paper
Belot, M. V. K. and Hatton, T. J (2008), “Immigrant Selection in the OECD,” CEPR Discussion Paper No. 6675.
Cobb Clark, D. A. and Khoo, S-E. (eds.) (2006), Public Policy and Immigrant Settlement, Cheltenham: Edward Elgar.

 


 

Footnote

1 See Leo Cendrowicz, “A Green Light for Europe's Blue Card,” Time, 24 October 2007

 

 

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Topics:  Labour markets Migration

Tags:  EU, immigration policy, skilled migrants

Professor of Economics, Australian National University and University of Essex; and Research Fellow, CEPR

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