Policy That Backfires: The Effect of Limiting the Inter-Employer Mobility of Temporary Migrant Workers on the Labor Market Outcomes of Competing Natives

Abstract

This thesis addresses the question of how visa-related policies restricting the inter-employer mobility right of temporary migrant workers (TMWs) affect the labor market outcomes of competing natives. My main argument is that such policies have the perverse effect of increasing the desirability of TMWs to employers, leading to labor market segmentation and a downwards shift in the labor demand curve for natives, depressing both equilibrium wage and employment. Thus far, the migrant impact literature has not sufficiently accounted for visa-related policy restrictions, an omission that might help explain the contradictory results of this literature. Limiting myself to an investigation of inter-employer mobility rights, I first developed a novel theoretical model for how restricting these rights might affect migrants’ impact, from which I derived a set of observable hypotheses. Next, to test these hypotheses, I employed the following two distinct methods: (i) a qualitative cross-country comparison of inter-employer mobility restrictions under various temporary migration programs (TMPs); and (ii) a quantitative survey-based investigation of the preferences of employment decision makers in Saudi Arabia (a country with a large and restrictive TMP). The quantitative portion utilized Choice-Based Conjoint analysis as well as an ordered logistic regression model. The results of both methods were generally supportive of my hypotheses; indeed, my findings suggest the importance of accounting for inter-employer mobility rights when defining analytical labor markets for the purpose of empirical impact investigations. Nevertheless, further research is needed to validate the insights of this exploratory project.