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Assessing Employment-Based Temporary-to-Permanent Immigration Systems in Europe and North America

Introduction and Executive Summary

Since the 1990s, a significant part of the immigration reform debate has centered on if the United States should change its legal immigration system to accept more high-skilled migrants. President Donald Trump and his congressional allies have argued that the country must take cues from the Canadian and Australian merit-based systems and focus on admitting almost exclusively high-skilled migrants based on a points-based assessment of their professional and personal characteristics.

Although the actual Australian and Canadian models share little with these proposals, looking to other countries for ideas for improving the U.S. system is worthwhile. Furthermore, proponents of these more restrictive models have focused on how Australia and Canada select migrants for their economies without determining if they produce outcomes that align with a core set of goals for reforming the U.S. immigration system. This situation presents problems for immigration reform in the United States.

The relentless focus on merit-based systems overlooks how other types of immigration systems may offer ideas for improving our ability to select and keep temporary labor migrants who want to reside in the United States permanently and contribute to our communities. European systems offer ideas the United States could readily implement since they also require migrants to first secure a job offer to work in the country, unlike proposed points-based systems. Many merit-based proposals have focused on seemingly novel processes for selecting migrants rather than examining data to determine if these measures produce outcomes that align with a country’s goals, including promoting permanent residency, filling labor gaps and providing migrants with jobs that fully utilize their skills, and limiting displacement of native-born workers. Simply selecting migrants based on an assessment of skills, as the Canadian or Australian systems show, does not necessarily meet all these outcomes.

The United States’ fragmented employment-based temporary-to-permanent status pathway1 is a prime target for testing these new ideas. Although the United States maintains the popular H-1B highly-skilled visa and employment-based, or EB, green card programs, transitioning from the H-1B program to the EB one is difficult because the programs use separate application processes. For instance, these workers and their employers may need to participate in two costly labor market tests to determine if the foreign worker will displace native-born workers. These two parties also contend with two different caps on the number of available H-1B visas and EB green cards every year, creating more insecurity for workers seeking to stay in the country and employers who want to fill labor shortages or maintain their workforce. Given these challenges, ideas from other countries can point to avenues for reform, especially ones that have evidence-based studies that demonstrate positive outcomes. This report examines temporary-to-permanent employment-based immigration systems in Canada, Denmark, Germany, Sweden, and the United States and includes assessments of their migrant integration and labor market outcomes.

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In concrete terms, we found:

  • The European systems used temporary-to-permanent streams as the primary path high-skilled workers can use to access permanent residency.
    • The European model allows individuals to directly apply for permanent status after entering to work on temporary status for five to eight years.
    • Germany and Sweden grant permanent residence to third-country nationals 2 with temporary status after five years; Denmark grants permanent status after eight years.
    • These countries grant individuals permanent status if they meet certain integration, income and self-sufficiency, and security requirements.
  • Canada and the United States have independent temporary and permanent programs with varying degrees of overlap between them.
    • In Canada, an individual on a work permit can apply for permanent residence through the country’s points-based permanent migration system.
    • In the United States, employers can sponsor an employee on a H-1B visa for an employment-based green card.
    • However, these processes require the migrant and their employers follow additional—and separate—processes for permanent residency.
  • The countries in this study require some to all non-citizens applying for temporary status to participate in a labor market test to assess if the candidate will displace existing workers.
    • The three European systems do not require non-citizens to undergo a separate labor market assessment at the permanent status stage if they work for the same employer in the same occupation.
    • The Canadian and U.S. systems often require non-citizens seeking permanent status to participate in a second test at the permanent residency stage.
  • The Canadian and European systems require applicants for permanent status to participate in an assessment that includes evaluations of their integration, which range from taking language tests to showing civic engagement.
    • These models diverge significantly from the U.S. system, which has maintained integration assessments of English language fluency and knowledge of U.S. history and civics only when a green card holder applies for citizenship.

Our review of outcome studies of these five systems presents a complex view about their performance. While temporary-to-permanent systems play a positive role in the economies of the case study countries, their design does not exempt them from dealing with challenges such as foreign workers with individualized academic and professional histories, a country’s history of migration and migration levels, and a country’s labor market composition.

Our research review discovered:

  • Although the models in each country address real world labor shortages, every system faces challenges dealing with labor market demand and promoting labor market integration.
    • Denmark, Germany, and Sweden struggle with low levels of employer recruitment of foreign workers, recognition of foreign qualifications, migration systems that historically serve lower-skilled migrants, and varying individual language fluency.
    • Studies show programs that allow migrants to work in Canada and the United States on a temporary and permanent basis fill labor shortages; migration to the United States also offsets the country’s shrinking workforce by attracting more working-age adults.
  • Immigrants generally do not displace native-born workers or lower their wages in the five countries, suggesting the content of labor market tests plays a bigger role in limiting displacement of native-born workers than the number of tests in temporary-to-permanent pathways.
    • The evidence of this effect is stronger in Canada and the United States, which have studies that examine the impact of their temporary and permanent legal migration programs.
    • The evidence is less clear for the European countries since the studies looked at how immigration impacted local rather than national labor markets, making them proxies for this issue.
  • Although research groups such as the Migrant Integration Policy Index have praised Sweden and Denmark’s efforts to open permanent status to more temporary migrants, temporary migrants in Canada and the United States convert to permanent status at high rates.
    • The large number of migrants that enter through temporary channels in Canada and the United States and later seek permanent residency drives these data, not the design of their temporary-to-permanent pathways.
    • The North American models make it harder for employers to retain temporary workers, especially in the United States.
      • The high demand for U.S. employment-based green cards, which have limited numbers every year, creates long backlogs that make it difficult for employers to retain temporary workers.
      • The integrated design of European systems may help offset these limitations, especially by limiting duplicative processes.
    • Moderate integration tests such as those in Canada may not necessarily hinder the transition from temporary-to-permanent status in countries that receive large numbers of temporary high-skilled migrants that later seek permanent residence.
      • More stringent integration tests in countries like Denmark and Germany may limit the number of permanent residents, suggesting that more stringent tests could alter the composition of future flows.

In response to these challenges, governments that want to improve their temporary-to-permanent streams could adopt proactive measures such as improving labor recruitment processes, adopting better credential recognition processes, and improving language supports to refine their system’s ability to attract and retain foreign talent. However, the U.S. system may need much broader reforms such as changing the visa cap and reducing redundancies in the H-1B and employment-based green card visa labor market tests to produce a more efficient system.

Our study also shows U.S. policymakers must select immigration policies from other countries based on the program’s outcomes rather than their perceived benefits or novelty. They must also establish clear goals for the U.S. immigration system to guide the process of assessing and selecting 8 measures from other countries. Immigration researchers can assist with this process by doing more work to examine the impact of various temporary-to-permanent systems.

While all the countries surveyed also have temporary visa programs for lesser-skilled migrants, we will focus exclusively on the higher-skilled temporaryto-permanent programs for this study because they align the most with the stated goals of increasing the skill level of entrants and the mechanisms these countries use to meet these goals. However, examining the avenues for lesser skilled migrants to also enter, work, and obtain permanent residence to fill labor market needs and provide alternatives to manage irregular migration are also worthy of examination. 3

End Notes

1 This report uses “status” as the general term for an individual’s legal status in the five case study countries. This status can be granted by a visa, green card, or temporary or permanent residence permit.
3 Some studies have examined this issue from the perspective of mid-to-low-skilled migrant workers. See for instance: Migration Policy Institute, Legal Migration for Work and Training: Mobility Options to Europe for Those Not in Need of Protection, 2019. Available at: https://www.migrationpolicy.org/research/legal-migration-work-andtraining-mobility-options-europe.

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