Economic arguments against immigration often take two forms – immigrants either suppress the wages of workers, or immigration creates higher unemployment. But our research shows that the impact of immigration on the labour market in Australia over the last 15 years is negligible. [...]
Past attempts at gauging the impact of immigration on the labour market compared geographical areas with different percentages of immigrants. The problem with this approach is that it assumes that geographic labour markets are fixed and distinct. It rules out the selectiveness of migrants and whether incumbents react to new migrants by moving to other neighbourhoods.
To get around this we used an approach pioneered by George Borjas, who found that immigration significantly impacted low-skill US workers who were at the same skill level as new immigrants. We looked at changes in immigration rates into different skill groups in Australia to identify the effects of immigration on the earnings and employment prospects of Australian workers. [...]
In our study we looked at six outcomes – annual earnings, weekly earnings, wage rates, hours worked, participation rate and unemployment. We explored 114 different possibilities in all. We estimated the model for both HILDA and the SIH data across the whole population and separately by male and female. We restricted it to young people and broadened our definition of skill groups. We also controlled for overall macroeconomic conditions.
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