Economics of Immigration

Transcription

1 Economics of Immigration

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3 Economics of Immigration Immigration and the Australian Economy P. N. (Raja) Junankar Honorary Professor, Industrial Relations Research Centre, UNSW Australia, Emeritus Professor, Western Sydney University and Research Fellow, IZA, Bonn, Germany

4 ECONOMICS OF IMMIGRATION: IMMIGRATION AND THE AUSTRALIAN ECONOMY Editorial matter, selection and introduction P. N. (Raja) Junankar, 2016 Foreword G. C. Harcourt, 2016 Chapter 2.1 John Wiley & Sons, Inc., 1998; Chapter 2.2 AGPS Press, Australian Government Publishing Service, Commonwealth of Australia, 1990; Chapter 2.3 AGPS Press, Australian Government Publishing Service, Commonwealth of Australia, 1994; Chapter 2.4 AGPS Press, Australian Government Publishing Service, Commonwealth of Australia, 1993; Chapter 3.1 John Wiley & Sons, Inc., 2005; Chapter 3.2 John Wiley & Sons, Inc., 2008; Chapter 3.3 World Scientific Publishing Co Pte Ltd, 2010 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission. In accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 2016 by PALGRAVE MACMILLAN The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of Nature America, Inc., One New York Plaza, Suite 4500 New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. ISBN: E-PDF ISBN: DOI: / Distribution in the UK, Europe and the rest of the world is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Library of Congress Cataloging-in-Publication Data is available from the Library of Congress A catalog record for this book is available from the Library of Congress A catalogue r ecord for the book is available from the British Library Typeset by MPS Limited, Chennai, India.

5 To the memory of the late Professor David Pope An eminent scholar, A wonderful colleague, and A great friend.

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7 Contents List of Figures and Tables Foreword by G. C. Harcourt Preface and Acknowledgements viii xvi xvii 1 Introduction 1 2 Impact of Immigration on Recipient Economy Immigration and the Australian Macroeconomy: Perspective and Prospective Immigration, Wages and Price Stability Immigration and Australia s External Account Balances Recent Immigrants and Housing How do Migrants Fare in the Labour Market? Do Migrants Get Good Jobs? New Migrant Settlement in Australia Do Migrants Get Good Jobs in Australia? The Role of Ethnic Networks in Job Search Are Asian Migrants Discriminated against in the Labor Market? A Case Study of Australia 301 Index 335 vii

8 List of Figures and Tables Figures 1.1 Immigration and the economy Immigration and the macroeconomy Population growth and growth in output per head in Australia Gain in GDP per capita by skill level of intake, Steady-state multipliers: impact on productivity growth Net migration rate Australia: Consumer Price Index ( = 1.00) Australia: inflation and unemployment rates Inflation and unemployment scatter: Australia Generalised model of international migration and Australian unemployment The model Permanent and long-term arrivals and departures Short-term arrivals and departures Skills index Wage and price inflation Wage inflation and unemployment rate B.1 Consumer Price Index, Nominal Wages Index and Implicit Price Deflator (GDP) to B.2 Exports Price Index and Imports Price Index to B.3 Percentage change for Exports Price Index and Imports Price Index to B.4 Percentage change for Consumer Price Index, Nominal Wages Index and Implicit Price Deflator (GDP) to C.1 Refugee, arrivals C.2 Target numbers and long term and permanent arrivals C.3 Target numbers and settler arrivals 93 viii

9 List of Figures and Tables ix Rates of natural increase, total increase and net migration Australian immigration and current account balance, Long-term and permanent movements, Immigration by visa category of entrants Current account and merchandise trade balances as a percentage of GDP, Components of the balance of merchandise trade as a percentage of GDP, Australian rural and manufacturing exports as a percentage of GDP, Australian terms of trade, Components of the balance of services as a percentage of GDP, Components of the balance of net income as a percentage of GDP, Components of the balance of net unrequited transfers as a percentage of GDP, Short-run linkages between immigration (arrivals) and the current account balance in the CIE model a simplified version Interactions between immigration (arrivals) and the current account balance in the Access Economics Murphy model A simple model of immigration and the current account Actual and simulated exports Actual and simulated imports Immigration program and arrivals Percentage error between immigration program and arrivals Australian net migration and Sydney house prices Simple supply and demand in the housing market Composition of immigrant net gain, by place of origin Net long-term and permanent movements Net induced movement of longer than twelve months Permanent movements Permanent migration to the major urban areas Permanent immigrants as a percentage of urban population 195

10 x List of Figures and Tables Net internal migration, major cities Refugee and SHP arrivals, by State of intended residence Immigration by visa category of entrant New Zealanders arriving in Australia, by State of intended residence Disaggregation of contributions to household formation, New residential building Total number of dwellings completed in New South Wales, Victoria and Western Australia Value of alterations and renovations Public housing inventory increases, Australia, to Dwelling prices for capital cities and for Australia Private and government housing rents Nature of occupancy, by period of residence, for overseas-born, Housing tenure by household heads in Australia, Housing tenure by period of residence for overseas-born household heads in Australia, A1.1 Tenure type and weekly income for overseas-born A1.2 Nature of rental occupancy and weekly income for overseas-born Composition of migrants by source country Educational qualifications of migrants in LSIA 1 and LSIA Distribution of good jobs (objective) by visa category Distribution of good jobs (subjective) by visa category Total effect of time on the conditional probability to get a good job (objective definition, Model 1) Total effect of time on the conditional probability to get a good job (objective definition, Model 2) Total effect of time on the conditional probability to get a good job (objective definition, Model 3) Total effect of time on the conditional probability to get a good job (subjective definition, Model 4) Total effect of time on the conditional probability to get a good job (subjective definition, Model 5) 296

11 List of Figures and Tables xi Tables JOANNA and ORANI base run results Price inflation, Australia Nominal wage change determination, Australia Price inflation (1960 q3 to 1989 q2), instrumental variable estimation Wage inflation (1960 q3 to 1989 q2), instrumental variable estimation Unemployment rate (1960 q3 to 1989 q2), instrumental variable estimation Results of the unit root tests in the inflation and migration variables Results of the cointegration tests: quarterly inflation and migration variables Inflation = [P(t) P(t 1)]/P(t 1) Results of the cointegration tests: quarterly inflation and migration variables Inflation = log(p(t)) log(p(t 1)) Results of the cointegration tests: annual inflation and migration variables Inflation = [P(t) P(t 4)]/P(t 4) Results of the cointegration tests: annual inflation and migration variables Inflation = log(p(t)) log(p(t 4)) Summary of regressions and results of causality tests: quarterly inflation as the effect Inflation = [P(t) P(t 1)]/P(t 1) Summary of regressions and results of causality tests: quarterly inflation as the cause Inflation = [P(t) P(t 1)]/P(t 1) Summary of regressions and results of causality tests: annual inflation as the effect Inflation = [P(t) P(t 4)]/P(t 4) Summary of regressions and results of causality tests: annual inflation as the cause Inflation = [P(t) P(t 4)]/P(t 4) Summary of regressions and results of causality tests: quarterly inflation as the effect Inflation = log(p(t)) log(p(t 1)) Summary of regressions and results of causality tests: quarterly inflation as the cause Inflation = log(p(t)) log(p(t 1)) 79

12 xii List of Figures and Tables Summary of regressions and results of causality tests: annual inflation as the effect Inflation = log(p(t)) log(p(t 4)) Summary of regressions and results of causality tests: annual inflation as the cause Inflation = log(p(t)) log(p(t 4)) A1 A comparison of the ORANI and JOANNA long-run closure: base run assumptions B1 Australia: average rates of inflation (per cent) D1 Summary statistics Percentage indicators of income owed abroad, selected years Overseas-born income recipients income quintiles by period of residence and birthplace, September-December Potential funds brought into Australia by immigration category, financial years to ($A million) Potential funds transferred to Australia by immigrants issued visas in Exports equation (annual data) Exports long-run elasticities (annual data) Marginal effects of immigration on exports ($m per 1000 persons) Marginal effects of immigration on exports (as percentage) Imports equation (annual data) Imports long-run elasticities (annual data) Marginal effect on imports ($m per 1000 persons) Current account balance equation (annual data) Current account balance long-run elasticities (annual data) Exports (quarterly data) Exports long-run elasticities (quarterly data) Imports (quarterly data) Imports long-run elasticities (quarterly data) Current account balance (quarterly data) Current account balance long-run multipliers (quarterly data) 147

13 List of Figures and Tables xiii Imports impact of visa categories (quarterly data) Summary of the impact of immigration on current account (annual data) long-run multipliers Summary of the impact of immigration on current account (quarterly data) long-run multipliers Components of population growth in major city statistical divisions, Average annual population growth rates for major cities, (per cent) Potential funds brought into Australia by immigrants, by visa category from to ($A million) Potential funds transferred to Australia by immigrants issued visas in , by visa category Overseas-born income recipients: income quintiles by period of residence and language, September December Occupied private dwellings, by structure, Immigration of construction trades people Nature of occupancy and weekly income of overseas-born persons settled by or before 1983 (per cent) Nature of occupancy and weekly income of overseas-born persons settled after 1983 (per cent) Proportion of home-owners/purchasers among immigrant and non-immigrant income units, by age and, for immigrants, by period of residence, Affordability index for immigrants, by tenure and country of origin Likelihood of income units being in housing stress, by country of birth of reference person and by tenure type, Likelihood of income units being in housing stress, by year of arrival of reference person in Australia and by tenure type, A1.1 Category of settler arrival (number) A1.2 Household structure of Australian-born and of immigrants by birthplace, A1.3 Average percentage share of occupier s equity in dwelling, by duration of residence,

14 xiv List of Figures and Tables 2.4.A1.4 Extent of home-ownership/purchase among immigrants and non-immigrants, by country of birth, A1.5 Tenure distribution of overseas-born, by State (per cent) A1.6 Distribution of tenure types of overseas-born by capital city and rest of the State (per cent) Migrants by visa category Labour market status, LSIA 1 and LSIA Changes in labour force status, LSIA 1 and LSIA Probability of a good job (Subjective) Probability of a good job (Objective) A1 List of variables Estimations of the probability to obtain a good job (Objective definitions) decomposition of the marginal effects Estimations of the probability to obtain a good job (Subjective definitions) decomposition of the marginal effects Main characteristics of Migrants Estimates of χ 2 : testing the significance of Asian dummies in Probit model Decomposition of unemployment probability gap between Asian and Non-Asian Migrants Decomposition of unemployment probability gap between Asian and Non-Asian Male Migrants by age group (Young: Age 30; Middle Age: 30<Age 45; Old: Age>45) Decomposition of unemployment probability gap between Asian and Non-Asian Female Migrants by age group (Young: Age 30; Middle Age: 30<Age 45 & Old: Age>45) Decomposition of unemployment probability gap between Asian and Non-Asian Male Migrants by levels of education Decomposition of unemployment probability gap between Asian and Non-Asian Female Migrants by levels of education Decomposition of unemployment probability gap between Asian and Non-Asian Male Migrants by English-speaking ability 316

15 List of Figures and Tables xv Decomposition of unemployment probability gap between Asian and Non-Asian Female Migrants by English-speaking ability Decomposition of unemployment probability gap between Asian and Non-Asian Male Migrants by visa category Decomposition of unemployment probability gap between Asian and Non-Asian Female Migrants by visa category A1 Estimates of Probit model for Males A2 Estimates of Probit model for Females A3 Estimates of Probit model for Females (without Asian dummies) A4 Estimates of Marginal Effects based on Probit models 332

16 Foreword Immigration has always been a controversial subject, not least in Australia and now. Emotions run high, and prejudice and xenophobia are often just below the surface. Raja Junankar does his readers a great service by presenting in these essays thorough, evidence-based critical analysis of all aspects of the immigration process. He has first-hand experiences of attitudes to, and problems of, immigrants through his time, first, in the UK, and then in Australia. He is a humane and passionate person, and these traits rightly underlie all his scholarly work, but his excellent scholarly attitudes ensure that he brings critical but powerful analysis, both theoretically and empirically, to all his writings. His many writings provide the basis to destroy current myths and attitudes, and this makes the present collection of essays invaluable. This volume contains a moving tribute to the late Professor David Pope with whom Raja often collaborated, and to whom the volume is dedicated. The author has also collaborated in these papers with other like-minded researchers from the same or related disciplines. All told, this volume is indispensable in the current climate of soul-searching and debate about immigration and asylum seekers. Professor Emeritus G. C. Harcourt School of Economics, UNSW Business School xvi

17 Preface and Acknowledgements When I was a student at the London School of Economics I became aware of the issue of immigrants in Britain. The British newspapers were full of stories about immigrants, often derogatory stories about welfare cheats (dole bludgers). In an infamous statement in 1968, a former Conservative Minister, Enoch Powell, warned that immigration would lead to Rivers of Blood in the streets of Britain. Also, in 1978, Margaret Thatcher was afraid that Britain was being swamped by people of a different culture. As a migrant from India, my interest in this subject was not only an academic interest. Somehow, I never published anything about immigration to Britain. When I migrated to Australia I joined the Australian National University where I met and worked with (the late) Professor David Pope, a well-known authority on immigration. It was a fortuitous meeting that fed my research interests. Through David I met other demographers and academics who worked on immigration. This collaboration with David, and then subsequently with Professor Glenn Withers and Dr Cezary Kapuscinski, led to our joint work for several years. Much of this work was done under the auspices of the Bureau of Immigration Research (now defunct), an Australian Commonwealth government agency. Subsequently, at the University of Western Sydney I collaborated with Dr Stéphane Mahuteau on a project funded by the Australian Research Council. This led to researching the plight of migrants in the labour market. Work with another colleague, Professor Satya Paul, continued this research. I am indebted to the Bureau of Immigration Research and the Australian Research Council for the financial support that helped our research. This volume is a selected collection of my published papers over many years that investigate issues of immigration and the Australian economy. xvii