The competition for global talent has become one of the key policy priorities in Organisation for Economic Co-operation and Development (OECD)1 countries as they seek to respond to challenges posed by labour shortages, ageing populations, decreasing human capital and the intense race for innovation, competitiveness and economic growth. The global talent and the âbest and brightestâ refer to high-skilled immigrants, who are highly educated and work in sectors ranging from information and communications technology (ICT), engineering, finance and biotechnology to health care.2 Globalisation and the advent of new technologies have only heightened the urgency for governments to act if they do not want to fall behind. However, in contrast to trade and capital, many barriers to even high-skilled labour mobility remain in place.
In 2006, The Economist already warned that âremoving barriers is a priority: even America still rations the number of highly skilled immigrants it lets in, and Japan and many European countries do far worseâ (The Economist 2006). But, despite converging policy goals of recruiting high-skilled immigrants, while many countries have so far struggled to liberalise their policies, others have been more successful in attracting the âbest and brightestâ. High-skilled immigration (HSI hereafter)3 policies differ across countries.
For example, Germany had high structural unemployment whereas the United Kingdom (UK) did not, but both faced labour shortages in certain sectors to similar extents. Their HSI policy responses, however, have varied. The UK implemented an open HSI policy to fill labour shortages. In contrast, Germany was more cautious in liberalising its policy which remained quite restrictive for many years. Similarly, Sweden had a restrictive policy towards high-skilled immigrants for a long time in order to protect high-skilled workers from labour market competition. But policies can change over time. While the UK has restricted its HSI policy in recent years, Germany and Sweden have become more open. In contrast, repeated efforts in the United States (USA) to reform its policy to shift to skilled immigration have been unsuccessful so far.
What are the reasons for these differences across countries and over time? This is a crucial question facing modern society in terms of how they grow and develop, economically, socially and politically. The cross-national differences in policies are remarkable, but explanations for this outcome are largely missing in the literature. This book proposes to fill this gap by focusing on different coalitions between actors in advanced industrial countries.
The Argument
The book carries out a comparative analysis of HSI policies in OECD countries and seeks to explain differences in policies in terms of HSI openness. According to the traditional partisanship approach, political parties will pursue policies consistent with the preferences of their most important constituencies. Labour and capital are divided into high- and low-skilled sectors. The book argues that, despite converging policy goals for a more open HSI, divergence between countriesâ HSI policies continues. No consistent HSI position of left and right parties exists cross-nationally because different coalitions among sectors of high-skilled labour, low-skilled labour and capital take place. In this book, an index of statesâ openness to high-skilled immigrants (HSI Index) is developed in order to rank countries in relation to their openness at different points in time. And five detailed case studies (France, Germany, Sweden, the UK and the USA) are presented; these analyse different HSI outputs by portraying actorsâ preferences, aggregated in various coalitions and intermediated by institutional constraints (such as labour market organisation and political representation) across OECD countries.
The book contributes to the growing literature on HSI policies (Bhagwati and Hanson 2009; Boeri et al. 2012; Boucher 2016; Cerna 2009, 2014a; Chaloff and LemaĂźtre 2009; Chiswick 2010; Duncan 2012; Shachar 2006; Smith and Favell 2006; Triadafilopoulos 2013; Wiesbrock and Herzog 2010). However, many of these works do not focus on explaining HSI policy differences systematically across countries. The evidence I present challenges some influential interpretations of the political economy of industrial democracies applied to HSI. It disputes the traditional partisanship approach where the left represents labour and the right promotes the interests of capital (Hibbs 1977; Alt 1985). It also refines the significant âvarieties of capitalismâ approach (Bucken-Knapp 2009; Caviedes 2010; Hall and Soskice 2001; Menz 2009), it disagrees with globalisation theories that countriesâ policies are converging to a common (Anglo-Saxon) model (Cornelius et al. 1994; Freeman 2006), and it calls into question the usual claims that labour immigration policies follow the cycles of economic growth and unemployment rates (Calavita 1994; Shughart et al. 1986). My analysis casts doubt on these common assumptions and provides a fuller understanding of the topic of HSI by focusing on coalitions in labour market organisation and political representation.
Significance and Background of High-Skilled Immigration
The topic of HSI is relevant for scholars of political economy, immigration, globalisation and public policy and also to policy-makers. The number of highly educated immigrants in OECD countries has increased by more than 70 % in the past decade, reaching 27.3 million in 2010/2011 (OECD 2014). Immigrants as a proportion of the total high-skilled labour force were over 20 % in Australia, Canada, Ireland, New Zealand, Switzerland and the UK (OECD 2012: 54).4 This is a considerable number, considering high-skilled immigrants have distributional consequencesâthey create both winners and losers. But there is a gap in the existing literature on the distributional impacts of skilled immigration and the politics this entails. Understanding the determinants of immigration should be of interest to a wide range of scholars and policy-makers. What advantages can the immigration of high-skilled workers bring?
First, HSI appears to be a net benefit for the receiving economies (Chiswick 2005, 2010). It is linked with greater competitiveness, innovation, economic growth, productivity, efficiency, entrepreneurship and invention5 (improvements in technology) (Boeri et al. 2012; Chiswick 2010; Nathan 2014; Peri 2012). Endogenous growth theory suggests that increasing human capital stock leads to dynamic growth and spill-over effects (see Romer 1994).6 An Australian report shows the likely effects over 20 years of the government increasing the current intake of skilled migrants by 50 %âthe economy would grow by 3.5 % by 2024â2025 and the average income would be $335 higher (Productivity Commission of Australia 2006: 137). Another study from the USA estimates that, without constraints on green cards and H-1B visas (permanent and temporary visas) between 2003 and 2007, an additional 182,000 foreign graduates in science, technology, engineering and mathematics (STEM) fields would have remained in the country, their earnings and contribution to GDP would have been $14 billion in 2008, and they would have paid $2.7â3.6 billion in taxes (Holen 2009: 2).
The increase in skills through HSI is also said to âaccelerate the rate of scientific discoveryâ, which may bring large benefits for particular groups of the population (Borjas 2006: 32). In addition, high-skilled immigrants can contribute to job creation in the host country. For example, a US study has shown that, between 2000 and 2007, for every additional 100 foreign-born workers with advanced degrees in STEM fields, 262 additional jobs were created for native US citizens on average, but only 44 for non-STEM-related fields (Zavodny 2011). A more recent estimate indicates that the low cap on the H-1B visas in 2013 resulted in 100,000 fewer jobs being filled directly and 400,000 being indirectly created (Compete America 2014). Even though existing research points to a positive, but small, impact on economic growth, other (cultural) factors cannot be measured easily (House of Lords 2008; Ruhs 2008).
Second, HSI can help to fill labour shortages in the short term, while countries are able to respond to these shortages through domestic reserves (in particular, women and young and older workers, as well as already present immigrants) in the medium to long term. Studies indicate that future employment growth will be focused on service activities. At European Union (EU) level, the European Commissionâs agenda for new skills and jobs estimates that by 2020 there will be a shortage of about one million professionals in the health sector (European Commission 2010: 9) and up to 900,000 ICT practitioners (European Commission 2014).7 Hence governments are increasingly under pressure from companies and employersâ associations to deal with labour shortages in high-skilled sectors. The threats from the capital side are that unfilled positions hurt companiesâ productivity and profits, which will have adverse effects on the overall economy. High-skilled immigrants may also lead to a decreased inequality by redistributing wages and unemployment. This is the argument about economic efficiency and distribution (Borjas 1995). By eliminating labour shortages, high-skilled immigrants can reduce wages of existing high-skilled workers, which decreases the wage gap between high-...