The Case for More H1B Visas

Apparently, there is an ongoing debate in Trumpworld about whether more H1B visas are a good thing. From an economic perspective, the answer is a clear yes.

From the standpoint of economic efficiency, allowing a highly skilled immigrant to work at a U.S. firm is, for standard reasons, beneficial. The transaction is voluntary, so both the employee and employer are better off.  And there are no obvious negative externalities (not counting, of course, pecuniary externalities). In addition, the U.S. government collects more revenue in the form of payroll and income taxes.

From the standpoint of economic equality, allowing a highly skilled immigrant is again beneficial. The relative wage of skilled versus unskilled workers depends on, among other things, the relative supply of the two types of worker. When highly skilled workers immigrate into the United States, the demand for less skilled workers rises. 

Think of technology firms that need both engineers and janitors. When the supply of engineers rises, the demand for janitors increases, leading to higher janitor wages.

So an increase in H1Bs visas not only expands economic liberty (arguably a good thing in itself) but also increases both efficiency and equality.

Score one for Vivek and Elon.

Update: A friend points out there may be significant positive externalities in form of new knowledge that highly skilled immigrants would produce. I agree. That strengthens the case.