Immigration and Wage Growth: The Case of Australia

We discuss various ways in which an economy can adjust to immigration-induced labour supply shocks, and what the implications are for wages. We then describe the empirical approaches that aim at quantifying the wage effects of immigration, and point out the challenges for empirical work. Turning to Australia, we review the status of Australia's immigration program and migrant population, as well as recent developments in the labour market outcomes of Australian residents. We survey existing empirical evidence analysing the links between immigration and wages in Australia, which, while sparse, does not generally support adverse impacts on average wages or wages of low-skilled Australians. Finally, we discuss this Australian experience in the context of the adjustment mechanisms reviewed earlier and consider the implications of these findings.