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Regionally targeted migration policy as an instrument for regional development: a general equilibrium assessment

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  • Tran, Nhi
  • Roos, Louise
  • Giesecke, James
  • Madden, John

Abstract

Preferential treatment in the granting of certain classes of visas to migrants agreeing to work in non-metropolitan regions has become an important instrument of the Australian federal government’s regional development policy. This paper undertakes an analysis of the efficacy of this policy with a dynamic multiregional computable general equilibrium (CGE) model, TERM. A version of the model is constructed with 15 regions, 7 of them being non-metropolitan. In order to capture the indirect effects on regional labour supply of this policy, it was necessary to introduce into TERM a labour supply specification which provides a detailed treatment of labour choice behaviour of workers identified by skill class, employment status, industry, region, age group and visa status. The model is parameterised to capture: the underlying transitions between labour categories (such as those between visa categories); and worker preferences regarding choices between occupations and regions of employment. Eight CGE simulations are undertaken, seven in which non-metropolitan regions are targeted in turn by a 1000-person increase in their intake of migrants under the specified visa classes. The eighth simulation involves an untargeted 1000-person increase in the visa intake in which migrants are allowed to settle across regions in accordance with historical patterns for those visa classes. The results show that regional targeting does generate improvements for the targeted regions in variables which are often used as regional development indicators, such as employment and real GDP. However, the effects on a targeted region’s population are considerably below the thousand persons taking up residence under the new visas. Right from the start labour-market displacement effects occur due principally to the boost to the region’s labour supply depressing the regional wage rate which in turn causes increases in net interregional emigration of existing workers. In the first year of the...

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  • Tran, Nhi & Roos, Louise & Giesecke, James & Madden, John, 2015. "Regionally targeted migration policy as an instrument for regional development: a general equilibrium assessment," Conference papers 332608, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332608
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    References listed on IDEAS

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    1. Mark Horridge, 2011. "The TERM model and its data base," Centre of Policy Studies/IMPACT Centre Working Papers g-219, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Horridge, Mark & Madden, John & Wittwer, Glyn, 2005. "The impact of the 2002-2003 drought on Australia," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 285-308, April.
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