U.S. Immigration Policy in Global Perspective: International Migration in OECD Countries

The United States possesses a number of competitive assets in the global war for talent: most notably, its huge and flexible labor market and an abundance of leading-edge multinational corporations and world-class universities. However, the United States also faces growing competition in the global labor market from other countries within the Organization for Economic Cooperation and Development (OECD), as well as from the expanding economic opportunities available in the home countries of Indian and Chinese professionals who constitute a vital talent pool for U.S. high-tech companies. These trends underscore the need to revamp U.S. immigration policies to make them more responsive to the demands of an increasingly competitive global economy.

Yet the quota-based immigration system of the United States diminishes the country’s ability to sustain, let alone expand, inflows of high-skilled immigrants. The optimal remedy for this defect in U.S. immigration policy is to replace the H1-B visa program for highly skilled foreign professionals with a quality-selective regime along the lines of the point-based systems introduced in Australia, Canada, and New Zealand. The United Kingdom is moving in this direction, away from a work-permit regime to a multi-tiered system that would entitle high-skilled immigrants to work for any British employer or to set up their own businesses in the country. However, the political environment in the United States—where homeland security concerns remain acute five years after September 11th and the furor over undocumented immigration clouds the separate issue of skilled immigration—provides little cause for optimism that such a policy reform will soon materialize.

Among the findings of this report:

Migration Patterns in the OECD, 1990-2000

• Luxembourg has the OECD’s largest foreign-born population (32.6 percent in 2000), followed by Australia, Switzerland, and Canada.

• Austria, Finland, and Ireland posted triple-digit growth rates in their working-age immigrant populations during the 1990s.

Global Competition for Skilled Immigrants

• In 2000, the United States was home to 12.5 million immigrants with more than a high-school education, representing 50.7 percent of the OECD total.

• The more educated share of working-age immigrants increased significantly in several OECD countries during the 1990s, especially Ireland, the United Kingdom, Luxembourg, and Finland.

Integration of Skilled Immigrants

• Immigrants with a college degree are more likely to obtain skilled jobs in the United States than elsewhere in the OECD.

• The success of educated immigrants in securing U.S. jobs commensurate with their skills varies widely by country of origin, ranging from 76 percent of educated men from India to 25 percent of educated Moroccan men.

Out-Migration from OECD Countries

• Mexico is the OECD’s biggest source of expatriates living in other OECD countries, followed by the United Kingdom, Germany, and Italy.

• The United Kingdom is the OECD’s leading source of skilled emigrants living in other OECD countries, followed by Germany, Mexico, and Canada.

“Brain Gain” and “Brain Drain”

• Australia, Canada, Luxembourg, the United States, Switzerland, New Zealand, and Sweden experience the OECD’s greatest net “brain gain” in the bidding for skilled workers.

• In 2000, the United States was a net importer of 9.9 million immigrants with more than a high-school education, equivalent to 5.4 percent of the U.S. working-age population.

Countries of Origin

• In 2000, 51.8 percent of the U.S. foreign-born population came from Latin America and the Caribbean, with Mexico accounting for the largest share.

• While Mexican immigrants to the United States are predominately less-skilled workers, the skilled immigrant community draws upon a much broader geographic base that includes the E.U., Eastern Europe and the former Soviet Union, East Asia, South Asia, South America, the Middle East, and Africa.

Recent Trends in Immigration to the United States

• Between 2000 and 2005, the foreign-born population from India experienced the most dramatic increase (39.8 percent), followed by Peru and Honduras.

• Among immigrants arriving from 2000 to 2004, 12.1 percent held advanced degrees (compared to 10.3 percent of those arriving between 1990 and 1999), while 22.2 percent had bachelor’s degrees (compared to 17.3 percent of those arriving during the 1990s).

Competitive Challenges to the United States

• While China, South Korea, and Japan have increased their funding for research and development (R&D) significantly, especially since 9/11, U.S. R&D funding in the physical sciences and engineering has declined or remained stagnant since the early 1990s.

• Other nations, particularly in Asia, account for a rising share of published scientific papers, as well as a growing share of applications for U.S. patents.

• The foremost challenge to U.S. primacy in the global labor market comes from India and China, both of which are experiencing high economic growth rates and rapid technological developments that boost domestic job opportunities for university-degreed professionals, thus diminishing the allure of immigration to the United States.

• In Fiscal Year (FY) 2003, India alone accounted for 36.5 percent of all H1-B visas and 24.7 percent of employment-based LPR (legal permanent resident) petitions approved in FY 2004. China accounted for 9.2 percent of H1-B visas in FY 2003 and 10.0 percent of employment-based LPRs in FY 2004.

Arbitrary Limits on High-Skilled Immigration to the United States

• In 2004, Congress allowed the annual H1-B quota to revert from 195,000 to its 1990 level of 65,000, which represents just 1 percent of the U.S. science and engineering workforce and has been filled before the start of each fiscal year since it took effect.

• The time (5 months or more) and administrative/legal fees ($3,000-5,000) required to process initial applications for H1-B visas hinder recruitment of skilled foreign professionals, while extensions of H1-B visas beyond the current six-year limit are costly and time consuming.