By Nick Li

A recent report written for the US Council on Foreign Relations by UC San Diego economist Gordon Hanson challenges the conventional wisdom on illegal migration. Hanson’s previous work has also overturned some of the conventional wisdom, like the idea that Mexican migrants to the US are "negatively selected," i.e. they are the poorest and least educated Mexicans. In fact, Mexican migrants appear to be mildly positively selected, having above average skill and education – 32.6% of residents of Mexico have completed between 10 and 15 years of schooling, while the number for recent Mexican immigrants to the US is 64.8%.

The new report is likely to infuriate people like Lou Dobbs and Pat Buchanan (who humorously writes on his web-site "What can be said for a man who would allow his home to be invaded by strangers who demanded they be fed, clothed, housed and granted the rights of the first-born? What can be said for a ruling elite that permits this to be done to the nation, and who celebrate it as a milestone of moral progress?" [The answer is clearly that the man wanted to buy tomatoes for $2 a pound and the ruling elite wanted a cheap maid and gardener.])

This is because it explains the problem in terms of a simple economic logic that forces righteous nationalist ideologues, on the right or left, to accept the pragmatic realities of illegal migration. Moreover, it proposes innovative policies to help remedy the problem.

As Hanson observes: "Illegal immigration is persistent because it has a strong economic rationale. Low-skilled workers are increasingly scarce in the U.S. while they are still abundant in Mexico, Central America and elsewhere… simply handing out more temporary visas won’t be enough to staunch illegal immigration, because the illegal route is for the moment vastly more efficient than the cumbersome legal system. Illegal migrants tend to arrive in larger numbers when the U.S. economy is booming and move to regions where job growth is strong. Legal immigration, in contrast, is subject to strong bureaucratic delays, which tend to disassociate legal inflows from U.S. labor-market conditions. The lengthy visa application process requires employers to plan their hiring far in advance. Once here, guest workers cannot easily move between jobs, limiting their benefit to the U.S. economy."

In other words, current guest worker programs resemble labor markets in continental Europe, minus the worker protections.

"An expanded guest-worker program, with highly regulated inflows of temporary, low-skilled foreign labor, would be unlikely to attract much interest from U.S. employers; a cumbersome legal channel would rather give them an incentive to continue hiring illegals. Were new legislation to combine stronger border and interior enforcement with an unattractive guest-worker program, it would be pitting policy reform against itself. Stronger enforcement would deter illegal immigration; a cumbersome guest worker program would encourage it. Only one of these components would be likely to survive in the long run."

Hanson goes on to propose that the temporary immigration program be redesigned from the ground up, and that successful reform must mimic the current beneficial aspects of illegal immigration. His innovative proposals include the creation of a global temp agency by the Department of Homeland Security, allowing U.S. employers to post ads for jobs and foreign workers to apply to fill them. This would allow the requisite flexibility while improving national security and monitoring of migrants. Allowing existing visa holders to move between jobs is crucial, as it prevents abuses by unscrupulous employers while maintaining the attractiveness of migrant labor for employers. Finally, any such system requires flexibility in the number of guest workers admitted, so Hanson proposes a market-based solution – auction off the right to hire guest workers to U.S. employers. The price that prevails in this auction then provides an indicator to the Federal government about how many visas to provide. This is my favorite proposal of Hanson’s, as it provides another source of funding to offset any additional costs of guest-workers to social programs, beyond the gain in tax revenue from having wages "above-ground." It also helps answer the left-wing critics who claim that low-skilled migration is driven by U.S. employers seeking to undercut the wages of locals – employers will have less of an incentive to hire guest-workers purely to undermine unionization or wage demands of local workers and more of an incentive to use the program for its original purpose, which is to match employers who are unable to meet their local labor demands with workers who are more than willing to do the work that Americans don’t want to do.

None of this is perfect – some amount of illegal migration is inevitable under any system – but it would be a big step forward. Many of these proposals make sense for other countries as well. I only hope the Lou Dobbs and Pat Buchanan’s of the world are listening.