In an Institute of Economic Affairs report released today, The Challenge of Immigration – A Radical Solution, Nobel Prize winner, Prof. Gary Becker, argues that visas to work in the UK should be sold off. The coalition’s immigration cap scheme could be amended using this proposal to ensure that the most suitable immigrants are allowed in. Even using conservative estimates, this could raise over £600 million a year.
Using the price mechanism would allow those with the most information about their likely gains from immigration to make the decisions about how much a place working in the UK is worth to them. The people willing to pay the most to live in the UK are likely to be the same people who would contribute most to our economy. This would ensure that those immigrants allowed into Britain would most closely match the skills needed by organisations.
The coalition’s current policy of allocating working visas assumes that a bureaucratic process is capable of determining how many people of exactly what skill-set and experience will be best for the UK. It means that exemptions apply for some areas such as football and clergy, yet not for academics.
If the coalition wants to have a fixed cap on the number of working visas it issues, it should allocate them by selling them off, either by auction or by setting a price and then adjusting it over the years dependent on demand. Some categories of migrant could be eligible for a loan or their employers could pay the fee. Charging a fee for immigration would meet the key aim of the coalition’s cap policy – to increase the likelihood that immigrants skills’ are the ones Britain most needs.
The people most likely to be attracted by a fee are the most economically active migrants and those with a real commitment to the UK. They would likely be the most skilled, those who are young (with a longer time to collect the benefits) and those with a cultural commitment to the UK.
Commenting on the report’s release, Mark Littlewood, Director General of the Institute of Economic Affairs, said:
“The coalition’s cap on economic migrants is a disaster for the UK. Universities in particular are being hit hard with the cap making it much harder for them to attract the high calibre of lecturers they need.
“It is absurd that we assume bureaucrats in Whitehall can know the entire skills needs of the country. The current system has produced bizarre results with exemptions for athletes, Premiership footballers and minsters of religion, yet top scientists, engineers and academics have to vie for places under the cap.
“Rather than having a bureaucracy determining whether someone is sufficiently well trained in architecture or dentistry or some other skill, we can simply let the market decide. This would be more efficient and would probably yield an income stream of several hundred million pounds a year.”
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Notes to editors
The charge would only apply to economic migrants. Asylum seekers and so on would be dealt with under other arrangements.
The full report, The Challenge of Immigration – A Radical Solution, is a transcript of the 2010 Annual Hayek Memorial Lecture, delivered by Prof. Gary Becker. It includes a commentary by Diane Coyle and can be downloaded here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
About the authors
Prof. Gary S. Becker won the 1992 Nobel Prize in Economic Sciences ‘for having extended the domain of microeconomic analysis to a wide range of human behaviour and interaction, including nonmarket behaviour’. He is Professor of Economics and Sociology at the University of Chicago. He is also the Rose-Marie and Jack R. Anderson Senior Fellow at the Hoover Institution; and a Research Associate of the Economics Research Center at the National Opinion Research Center. Gary S. Becker pioneered study in the fields of human capital, the economics of the family and the economic analysis of crime, discrimination, addiction and population. He is a founding member of the National Academy of Education, a member of the National Academy of Science and a fellow of the American Statistical Association, the Econometric Society and the American Academy of Arts and Sciences. He is also a member of the American Economic Association, of which he was president in 1987. In 1967, Gary S. Becker was awarded the John Bates Clark Medal, which is given once every two years to the most outstanding American economist under the age of 40. He was also awarded the National Medal of Science in 2000 for his work in social policy, and the Presidential Medal of Freedom in 2007, the highest civilian award in the USA. Gary S. Becker’s current research focuses on human capital, the family and economic growth. He was a featured columnist for Business Week and co-author of the Becker-Posner Blog.
Diane Coyle runs the consultancy Enlightenment Economics and is the author of The Soulful Science and The Economics of Enough. Diane is a visiting professor at the University of Manchester and has a PhD from Harvard University. She is a trustee of the BBC and has served on a number of other public bodies. Diane is currently a member of the UK’s Migration Advisory Committee, but she has contributed to this monograph in a personal capacity.