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Modelling the Economic Impacts of Migration and Population Growth

  • James Giesecke
  • G.A.Meagher

The paper uses MONASH, a dynamic computable general equilibrium model, to investigate the impact on the Australian economy of a 50 per cent increase in the skilled migrant intake over the period 2005-2025. The primary purpose of the modelling it to identify how the labour market might absorb an increase in the number of skilled visa entrants. To that end, the modelling recognises labour supply by 67 types of skill (defined as an education field classified by an education level) and 81 occupations. We find that, even with the increase in immigration heavily weighted towards skilled visa entrants, the main effect of the policy is to increase the scale of the economy. The main compositional effects are to shift economic activity towards the construction sector and sectors supplying material inputs to construction activity, raise the relative wages of workers that supply labour used intensively in construction and related sectors, reduce the relative wages of skilled labour, and increase returns to capital relative to labour.

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Paper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-157.

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Date of creation: May 2006
Date of revision:
Publication status: Published in Giesecke, J.A. (2006), 'The economic impact of a general increase in skilled immigration', People and Place, Vol. 14(3), pp. 48-63.
Handle: RePEc:cop:wpaper:g-157
Contact details of provider: Postal: PO Box 14428, Melbourne, Victoria, 8001
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  1. Bruce Headey & Gary Marks & Mark Wooden, 2005. "The Structure and Distribution of Household Wealth in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(2), pages 159-175, 06.
  2. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Society for Computational Economics, vol. 9(2), pages 83-127, May.
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