A recent study by the Department of Immigration in Australia confirms the Borjas effect and proposes a solution to it. Note also the reference to the US’s ability to absorb immigration which is relevant to the discussion I had with zizka in comments on a previous posting:
Poorly educated city dwellers should be given a helping hand to cope with Australia’s expanded immigration program with an overhaul of the tax system to spur them into jobs, a Federal Government report says.
While immigration “makes Australians richer on average”, the report says, adverse side-effects can be headed off.
Without help, the poorly educated could suffer as they competed for jobs in parts of Sydney and Melbourne where low-skilled migrants were concentrated.
The thrust of the Garnaut report is that Australia is pursuing the right immigration strategy with its emphasis on attracting the young and highly skilled.
This contrasted with the approach in the US, which is dominated by an influx of largely unskilled Latin Americans to fill shortages at the bottom end of the labour market. low-income Australian workers generally get a bigger income “kick” from the immigration system than their better-educated counterparts, the report says.
This was because governments redistributed the financial benefits of a bigger population to the less well-off.
High-skills immigration also created more future job opportunities, but well-qualified locals found their labour was no longer as scarce.
Despite this, highly skilled locals were better placed to benefit from property prices.
“Owners of urban land are especially big winners and not only in the cities that receive large proportions of migrants,” says Professor Garnaut.
The report, commissioned by the Immigration Department as part of its evaluation of the program bringing in 100,000-plus migrants a year, says a case can be made that the US system, with more flexible wage rates, is better at placing low-skilled migrants in jobs.
Comments are closed.