The visa goes where it is worth most
A lottery hands a scarce permit to whoever draws it. Weighting by wage hands it to whoever will pay most for it, which is a rough measure of where the worker will produce most. Rough is the right word, and it is the subject of the first argument against.
▸ Show reasoning & sources ▾ Hide reasoning & sources
Value
The stream is output: goods and services produced that would not otherwise exist, because a scarce work permit sits with the employer who values it most rather than with whoever won a draw. That belongs to the class this site uses for economic systems and prosperity. The wage itself is not the value — it is a payment from an employer to a worker, and both sides of it are inside the economy — so what is counted is the surplus above the wage, which is what the employer keeps and what competition passes to customers. Nothing about the worker's own welfare enters here. The value sits in the middle-upper part of the scale, at the level this site uses for economic output.
Impact
Allocating a fixed number of permits to those who bid most for them raises total output as long as the bid tracks the value produced. The bid here is the offered salary, and the shift in the mix is worth about 1.62 billion euro a year in additional pay across the 85,000 selections. What matters for output is not that pay but the margin above it: what the employer keeps after wages, which is what made the job worth filling. Twenty percent of the wage is used for that margin, in a range from 5 to 40 percent, giving 324 million euro a year. The upper end of the range would be justified if the specialist roles at issue are genuinely hard to fill; the lower end if employers are largely bidding against each other for the same people. Nothing here assumes any additional worker enters the country, because none does. The Impact is small and of the same order as the tax gain, which is what one expects when a fixed quota is reshuffled rather than enlarged.
▸ Show calculation ▾ Hide calculation
| Additional pay of the people selected [2][3] | 85,000 × 19,000 euro | 1,615 million euro | |
| × | Margin the employer keeps above the wage Setting, range 5 to 40 percent: what made the job worth filling; the low half of the range is used because firms winning permits in the old lottery largely substituted rather than expanded [4] | 20 % | 320 million euro |
| ÷ | Normalised Impact scale of this evaluation | 50 million euro a point | 6.4 |
Plausibility
The claim that a higher bid signals higher value is a proposition about markets, not a measured finding, and the market in question is unusual. The counterfactual is the same 85,000 permits drawn at random, and no study compares output under the two allocations, because the weighted rule is nine months old. What can be said is that the H-1B lottery has been used as a natural experiment before: comparing firms that won permits against those that did not, researchers found the winners did not expand employment or patenting much, which suggests they substituted the new worker for someone they would otherwise have hired [4]. If that holds generally, the surplus from any single permit is smaller than the wage suggests, which is why the margin used here sits at the lower end. The confounder that would matter — that high-paying firms differ from low-paying ones in ways that also raise output — is not removed by anything, since no design separates the two. Reverse causation does not arise. The Plausibility is below the middle: the reasoning is sound in outline, no measurement supports the size, and the one clean study on adjacent ground points to a smaller effect than the wage implies.
Counterfactual: the same 85,000 permits drawn at random. Design: mechanistic — the chain (higher bid → higher marginal product → more output) is named but no design separates bid from firm characteristics. Confounder: high-paying firms differing from low-paying ones in ways that also raise output; unaddressed. Direction: no reverse causation, the rule preceded the draw. Ceiling: mechanistic 6.0 binds. Band: chain closed but unevidenced — each link is named and the substitution counter-mechanism from the lottery study is answered by setting the margin at the low end of its range; only the measurement is missing.
Nothing measured argues against the direction; the lottery study showing that winning firms substituted rather than expanded is answered by taking the low end of the margin range [4]. Read back: reshuffling the permits toward higher bidders raises output by roughly the amount assumed here about as often as it does not.
Open: Firm-level output and employment for FY2027 winners against FY2026 winners, matched on size and sector, would put a number on the margin and could carry P to 6.