Immigration and Its Impact on the Incidence of Training in Australia

Meredith Baker and Mark Wooden

Australian Economic Review, 1992, vol. 25, issue 2, 39-53

Abstract: Critics of immigration often argue that by providing a cheap alternative to training, immigration acts as a disincentive for employers to invest in training. Immigration, therefore, may be partly responsible for Australia's poor record in the area of industry training. This article evaluates this argument using data recently collected by the ABS. Probit models explaining the determinants of three types of training—in‐house, external and on‐the‐job—are estimated for the Australian‐born workforce. These models are then augmented with a variable representing the impact of skilled immigration. Initial estimates indicated that immigration was significantly and inversely associated with the probability of Australian‐born workers receiving in‐house training. This inverse association, however, may result not because employers hire skilled immigrants in preference to providing training, but because skilled immigrants are over‐represented in low training industries. A two‐step procedure, involving first identifying the size of industry fixed effects on training and then isolating the impact of immigration on these fixed effects, confirms that it is industry‐specific effects which are of most importance. It is concluded, therefore, that immigration is currently not displacing any training activities in Australia.

Date: 1992
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