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The Dynamic Effects of Skilled Labour Targeting in Immigration Programs


  • Richard G. Harris

    () (Department of Economics, Simon Fraser University)

  • Peter E. Robertson

    () (School of Economics, The University of New South Wales)


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.

Suggested Citation

  • Richard G. Harris & Peter E. Robertson, 2007. "The Dynamic Effects of Skilled Labour Targeting in Immigration Programs," Discussion Papers 2007-21, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2007-21

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    References listed on IDEAS

    1. McCulloch, Rachel & Yellen, Janet L., 1975. "Consequences of a tax on the brain drain for unemployment and income inequality in less developed countries," Journal of Development Economics, Elsevier, vol. 2(3), pages 249-264, September.
    2. Timothy J. Hatton & Jeffrey G. Williamson, 2006. "What Determines Immigration's Impact? Comparing Two Global Centuries," NBER Working Papers 12414, National Bureau of Economic Research, Inc.
    3. George J. Borjas, 2004. "Do Foreign Students Crowd Out Native Students from Graduate Programs?," NBER Working Papers 10349, National Bureau of Economic Research, Inc.
    4. Heather Antecol & Deborah A. Cobb-Clark & Stephen J. Trejo, 2004. "Selective immigration policy in Australia, Canada, and the United States," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 57-76.
    5. Paul W. Miller, 1999. "Immigration Policy and Immigrant Quality: The Australian Points System," American Economic Review, American Economic Association, vol. 89(2), pages 192-197, May.
    6. Deborah A. Cobb-Clark, 2006. "Selection Policy and the Labour Market Outcomes of New Immigrants," Chapters,in: Public Policy and Immigrant Settlement, chapter 2 Edward Elgar Publishing.
    7. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
    8. Bruce Chapman & Glenn Withers, 2002. "Human Capital Accumulation: Education and Immigration," CEPR Discussion Papers 452, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    9. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
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    Cited by:

    1. Eiji OKANO, "undated". "The Role of Optimal Fiscal Policy in a Currency Union," EcoMod2009 21500072, EcoMod.

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    Immigration; Human Capital; Computable General Equilibrium Models;

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