Immigration policy and market institutions in liberal market economies

This article examines how the regulatory character of market institutions shapes government responses to labour shortages, with particular reference to immigration policy. The period between the late 1990s and the late 2000s saw many advanced economies relax entry controls on select categories of foreign workers. This trend was most pronounced among states with liberal market institutions. The underlying reasons for these trends are analysed through an examination of the motivations for reform in Australia and the UK, two states that oversaw significant liberalisations of their labour immigration policies. It argues that the liberal character of key market institutions encouraged firms in these states to look to external rather than internal solutions for meeting their labour requirements. These findings suggest that perspectives from the comparative political economy scholarship, most notably the varieties of capitalism literature, may provide insights into the way that different modes of market regulation shape immigration policy preferences.