Hedging of Economic Risks for a Skilled Workforce: Are Immigrants Disadvantaged?

Abstract

Skilled immigration to the US has been multi-channelled via legislation on permanent and temporary visa programmes. This paper argues that skilled immigrants were not disadvantaged during the Great Recession because of a new hedging mechanism, which starts with the federal legislation that admits skilled non-immigrants, proceeds to vest authority in employers who perform rigorous screening and selection of temporary workers for future permanency, and ends with greater protection of those selected. To test this mechanism, this paper examines skilled immigrants' spatial mobility out of the country and their domestic labour market outcomes. The paper presents evidence from analysing repeated, nationally representative survey data of college graduates in the US using demographic techniques of intra-cohort and inter-cohort analyses. The major findings about the substantial cross-border mobility and high levels of labour force participation among at-entry temporary visa holders who later gained permanent residency provide strong evidence to support our proposed new hedging mechanism.