Do temporary visas depress wages more than permanent visas?

Russell Turpin
Wed, 19 Mar 2003 17:39:05 +0000

Slashdot pointed to this article about a suit
against Sun, regarding its use of H1B employees:

A few lines got me to thinking about the effects
of a temporary visa. Suppose the US allowed ten
thousand engineers to immigrate here permanently
from abroad. Obviously, that would increase the
supply of engineers, increasing competition,
perhaps pushing down wages, etc. But those
engineers would compete on the same basis as
everyone else, and being selfish pigs, they would
keep a constant eye open for better opportunity
(meaning, more $$$), including opportunities that
aren't necessarily tech work, and they would use
such opportunities as bargaining leverage in
their current job even when they had no intention
to jump ship, to bargain their own wage up, and
hence, helping support engineering wages across
the board.

BUT. If the same number are admitted on temporary
visas, and their continued residence is contingent
to some extent on their employer's good will, then
their ability to look for other opportunity is
limited, and instead of acting like selfish pigs,
they might act like docile dogs, happily taking
whatever deal is offered them. Prices are made on
the margin, so even a small percent of unnaturally
docile engineers could have a significant impact
on wages.

IF this is a reasonable model of the engineering
market, it implies that temporary visas are bad
for both the immigrant engineers and those
already here, and that a larger number could be
admitted by PERMANENT visa, with less effect on
wages. The contingent nature of the H1B visa,
which contingency is intended to protect resident
workers, might in reality act to depress wages
across the board, moreso than simply giving the
same immigrants permanent visas.

Temporary or contingent visas are used by many
nations as a way to bring in needed labor. Indian
engineers migrate to the US. Indian construction
and service workers migrate to Saudi Arabia. Is
the temporary and contingent nature of these work
visas hurting BOTH the immigrant and resident
worker? Would they both have better wages if the
same number of immigrants, or even more, were
allowed permanent visas?

I don't know enough to make an economic model of
this. It seems an interesting question.

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