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September 22, 2014

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Economist: Replace work visa caps with auction system

UC Davis professor pitches idea for work visa reform

A University of California, Davis economist has authored a report advocating for a market-based auction system for U.S. work visas, a unique system not seen anywhere else in the world.

On Tuesday, UC Davis professor Giovanni Peri presented his report, commissioned by The Hamilton Project of the Brookings Institution, to a forum that included a White House domestic policy advisors and political and business leaders from both sides of aisle.

The abstract, as well as condensed and full copies of the report, can be found here.

Peri proposes that the U.S. government hold an auction four times a year, with each auctioned permit tied to a temporary visa. Visa-holders could move from one job to another, addressing issues of exploitation by employers raised under the current system. The possibility of permanent residency would be available to those who stay employed.

Permits for highly-skilled workers would start at a minimum of $7,000, while the minimum bid for lower-skilled positions would be $1,000. If there was particularly high demand for a group of workers, the government could issue more visas.

The auction revenue would go to the federal, state and local agencies that provide social services to immigrants.

"A simplified immigration system designed to meet the needs of the economy would allow the United States to maximize the many benefits of immigration and would create a fairer process for potential immigrants," the policy brief states. "The auction-based approach to visa allocation would mean that visas would be given to the immigrants who will contribute most to the U.S. economy and to companies most in need of foreign labor. The market mechanism would also provide useful signals about the constantly-changing economic demand for immigration. By redistributing the auction revenues to the states and localities that receive the largest immigrant inflows, the benefits and costs of immigration would be more evenly distributed across the states."

After testing the system on temporary work visas, Peri suggests expanding the strategy to other areas of the immigration system.

Currently, temporary work visas for skilled workers, such as the H-1B visa, are capped by Congress and are in high demand. Every year over the last decade the cap limit has been met very early in the process.

The Contra Costa Times interviewed Peri on his proposal, and offers further details and explanation on the plan.

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