Economic Impacts of Migration and Population Growth

The Productivity Commission release its research report into the ‘Economic Impacts of Migration and Population Growth’ in May 2006. According to the Commission’s findings increasing skilled migration would make a positive, but small, overall contribution to Australia’s future per capita income levels. The report was commissioned by the Australian Government. To assess the effect of skilled migration, the Commission estimated the economic effects of a simulated permanent increase in skilled migration of about 50 per cent on the level in 2004-05, using the Monash model at the Centre of Policy Studies. Positive effects arise from higher participation rates and an up-skilling of the workforce. But some of the economy wide consequences have a negative effect, such as less capital per worker and a decline in the terms of trade. By 2024-25, the net effect is an increase in income per capita, on average, is projected to be about $400 (or about 0.7 per cent), compared with a base case scenario. Most of the gains are likely to accrue to the migrants. The result is consistent with previous Australian studies and others conducted overseas. Recent changes to Australia’s migration program include a greater emphasis on skills, increased numbers of temporary migrants, and more diversification in the country of origin. A greater emphasis on skills has resulted in improved labour market outcomes for migrants. English language proficiency stood out as a key factor determining the ease of settlement and labour market success of migrants to Australia.