The Dynamic Effects of Skilled Labour Targeting in Immigration Programs

Richard Harris and Peter Robertson

No 2007-21, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We consider the impact of the recent trend in immigration policies towards selecting migrants on the basis of skills. The analysis uses an inter-temporal general equilibrium model with endogenous skill formation. The model is calibrated to a steady state benchmark that represents Australia in 2000-2001. We then consider the impact of the increase in skilled migrants of approximately 20 thousand per year, which corresponds to the increase in flows of migrant Professionals in Australia since 2000. We find that this generates substantial crowding out of the higher Education sector in Australia. Moreover we show that, when this shock is anticipated as a permanent policy change, there is very little net increase in the stock of skilled labour due to falling student enrollments of 12%. Paradoxically, in this case, the decline in students increases the number of unskilled workers in the economy such that the ratio skilled to unskilled workers in the economy actually falls and the skill premium increases.

Keywords: Immigration; Human Capital; Computable General Equilibrium Models (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-07
New Economics Papers: this item is included in nep-cmp, nep-edu, nep-hrm, nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2007-21

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