The impact of immigration on the New Zealand labour market

Report
The Impact of Immigration on the
New Zealand Labour Market
Paper presented at ‘Economic Impacts of Immigration and Population
Diversity, International Workshop’, 11-13 April 2012
Michael Tse & Sholeh A. Maani
The University of Auckland
Economics Department
1
Question & Motivation
• A large segment of the NZ population is
foreign-born (almost a quarter).
• A key policy question is whether or not
immigration affects the labour market
opportunities of the existing workforce?
2
The direction of the impact on existing
workers is dependent on a number of
factors. These include:
• Substitutability between immigrants
and natives. Are immigrants and the
native-born with similar educational
qualifications complete substitutes?
3
Elasticity of substitution
• If immigrants and natives are
substitutes, then the inflow of
immigrants would reduce wages in the
labour market (Borjas, 2003; Orrenius & Zavodny,
2007)
• If immigrants complement native
workers, then we would expect positive
changes to earnings from immigration
(Ottaviano & Peri, 2007; Borjas, Grogger & Hanson, 2008)
•
4
Immigrant education and experience
• The value placed on education and
experience acquired abroad is often
less than the value placed on
domestic education and experience
(Lalonde & Topel, 1991; Duleep & Regets, 2002; Akresh,
2006; Antecol, Kuhn & Trejo, 2006)
5
International literature
• Altonji & Card 1991 and Borjas 2003: 10
% point increase in fraction of immigrants
reduces the wages of less skilled by 3-4
%.
• Card 2005, Addison and Worswick 2002 :
Mare’ and Stillman 2009, no significant
adverse effect
6
Modelling approaches of wage
effects for the native-born
• 1. Spatial approach
(Card, 1990, 2001, 2005; Altonji & Card, 1991; Dustmann, Fabbri &
Preston, 2005).
• 2. Factors of production approach
• (Borjas, et al., 1996, 1997; Jaeger, 2007Leamer, 2000; Orrenius &
Zavodny, 2007, Mare’ and Stillman, 2009).
• 3. National level analysis (skill group)
(Borjas, 2003, 2004, 2005; Orrenius & Zavodny, 2007).
7
Data
• New Zealand Income Survey (NZIS), 2002
to 2007
• This is an individual level data released
under the Confidentialised Unit Record
File (CURF) format.
8
Modelling Approach
• National level analysis based on skill and
work experience categories
• Wage effects of immigrant supply shocks
Extensions:
• We add spatial regional controls
• We incorporate ‘effective immigrant
experience’
9
• Immigrant supply shock:
• Pijt immigrant supply shock
• M (Immigrant), N(Native-born)
•i
educational qualification
•j
experience group
• t year
10
• 4 educational categories:
• No schooling
• School qualification (high-school
completion)
• Post-school
• Bachelor or higher degree
11
Model
• Immigrant shock, fixed-effects and
interaction effects on earnings and hours
worked:
• Pijt
•i
•j
•t
immigrant supply shock
educational qualification
experience group
year
12
13
Index of Congruence
a native-born
b immigrant
c occupation (two-digit)
Borjas (2003), Welch
(1999)
14
15
Results
• Immigrant shock, fixed effects and
interaction effects:
• Pijt
•i
•j
•t
immigrant supply shock
educational qualification
experience group
year
16
19
Spatial Correlation
• each cell is now defined as (r, i, j, t). That
is, each cell is determined by a specific
region, education level, experience group,
and year.
20
21
22
Defining Effective Experience
Let X be the effective experience of an
immigrant worker:
• A age
• Am age at migration
• AT age of labour force entry
23
• We estimate the three coefficients above
in a standard immigrant assimilation
regression of the form:
• Ic = 1
• Id = 1
•N
immigrant entered as a child
if entry as adult
native born
24
a = 0.4 experience overseas conversion
m = 0.7 experience after migration
t = 1.1 experience of child immigrants
25
26
Conclusions
We extend the standard national level
approach to incorporate local government
regions in the analysis.
• We defining groups by region-educationexperience, and it has some impact on the
results, but the effect is small.
27
• We adjust for the value firms place on
experience acquired abroad, and ‘effective
experience’ for each worker.
• Based on this experience framework the
estimates of wage effects continue to be
small.
28

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