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Immigration
Looking back, looking forwards
Motu Public Policy Seminar
Philip Stevens and Ganesh Nana
New Zealand Productivity Commission
Terms of reference
• Review immigration settings for the ‘long-term prosperity and
wellbeing’ of New Zealanders:
– System-wide view, not sector-specific
– ‘Working age’ (ie, not refugees, tourism).
• Think about ‘prosperity and wellbeing’ broadly – four capitals,
productivity, resilience, distribution, Treaty impacts and
implications.
2
Overview: A tale of two reports
Part I: Part II: Inquiry report
Immigration by the numbers Immigration – Fit for the future
PART I
The first migration to Aotearoa New Zealand
Migration, post Tiriti
The arrival of Europeans in Aotearoa New Zealand
Comparison of the Māori and non-Māori populations post-Te Tiriti, 1841–1911
Sources of migrants to New Zealand, 1871–92
6
Migration has re-emerged as a driver
of population growth
100 Covid-19
Australian mining
80 employment
Population change (thousands)
boom peaks
Oil shocks and
stagflation GFC
60
The Long Depression
The Great Depression
40
20
0
-20
The wool shock Asian financial
Economic crisis
-40 restructuring
1860 1880 1900 1920 1940 1960 1980 2000 2020
Natural increase Net migration Population growth 7
Both immigration and emigration
have risen
150
100
Migration (thousands)
50
0
-50
-100
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2018
Arrivals Departures Net migration
Figure | Migration as a share of the New Zealand population
Percentage of population living abroad
0%
10%
15%
20%
25%
5%
Lithuania 30%
Portugal
Latvia
New Zealand
Estonia
Ireland
Luxembourg
Poland
Iceland
Greece
Mexico
Switzerland
Slovakia
United Kingdom
Austria
Figure | Selected countries' diaspora, percentage of the resident population
Netherlands
Finland
Italy
Germany
Denmark
New Zealand has a large diaspora
France
Canada
Sweden
Australia
South Africa
1990
India
United States
2020
China
Japan
Belgium
50
The relative performance of the Australian and New Zealand
Real GDP per capita in 2011 US$ (thousands)
Migration from 45 economies, 1870–2018
Real GDP per capita since 1870, 2011 US$ (thousands)
New Zealand to 40
35
Australia increased
30
when the relative
25
performance of the 20
Australian and NZ 15
economies diverged in 10
the early 1970s. 5
0
1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Australia New Zealand
600
Stock of trans-Tasman migrants, 1881–2018
500
Migrants (thousands)
400
300
200
100
0
1954
1981
1881
1891
1901
1911
1921
1933
1947
1961
1966
1971
1976
1986
1991
1996
2001
2006
2013
2018
New Zealand-born in Australia Australian-born in New ZealandNew Zealand has high temporary Growth in new arrivals is mostly from
migration by international standards temporary migrants
11Labour shortages and net migration
25% 75
Businesses reporting labour shortages
Net migration (thousands)
20% 60
15% 45
10% 30
5% 15
0% 0
-5% 1990 1995 2000 2005 2010 2015 2020 -15
Labour shortage (left scale) Net migration (right scale)
Source: Quarterly Survey of Business Opinion and Stats NZ.
Figure | What single factor, if any, is most limiting your ability to increase turnover? LabourMigration accompanies job growth
100 25%
Net job creation, net migration (thousands)
Unemployment, economic inactivity (%)
80 20%
60 15%
40 10%
20 5%
0 0%
-20 -5%
-40 -10%
-60 -15%
1995 2000 2005 2010 2015 2020
Net annual jobs creation (left scale) Net migration (left scale)
Unemployment rate (right scale) Economically inactive (right scale)
Source: NZPC calculations based on SNZ Household Labour Force Survey (HLFS)., Linked Employer-Employee Data (LEED) and population data.
Figure | Net job creation and migration, unemployment and inactivity, 1995-2021Who are the migrants?
Migrants are more highly qualified than NZ-born
Migrants come from a wide range of countries Migrants are younger than NZ-born
14Immigration and industry productivity
250%
Finance insurance Chemical, rubber, non-
Figure | Industry intensity of migrant labour, labour productivity and total employment
and superannuation metallic manufacturing
200%
Standardised labour productivity (VA/FTE)
Dairy cattle
farming
Food, beverage, Telecommunication,
Wholesale trade internet, and library
tobacco
150% manufacturing services
Sheep, beef cattle,
and grain farming
Forestry and Professional,
scientific, and
100% logging
tech services
Horticulture and
fruit growing
Building construction
50%
Accommodation
Construction and food services
services
Textile, cloth, footwear Administrative and
manufacturing support services
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Percentage of migrant labour
Primary sector Manufacturing, utilities and construction Trade, logistics and hospitalities Other servicesEconometric analysis • Skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers. • That higher contribution is likely due to a mix of skill differences and/or effort that is largely reflected in higher wages. • Migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born. • The share of employment for long-term migrants has grown over time (from 2005 to 2019). • Their relative contribution to output appears to be increasing over the same period. • Tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.
Immigration and capital
600
Employment, Migrant population, Capital/Labour
500
400
(1960=100)
300
200
100
1960 1970 1980 1990 2000 2010 2019
Total Employment Capital stock Capital/Labour Migrant population
Source: University of Groningen and University of California, Davis.
Figure | Employment, capital and migrants (1960=100), 1960-2019
17House prices were rising long before net migration
rose, and continued to rise after net migration fell
30 600
Natural increase, Net migration (thousands)
25 500
House Price Index
20 400
15 300
10 200
5 100
0 0
-5 -100
1990 1995 2000 2005 2010 2015 2020
Natural increase (left scale) Net migration (left scale)
RBNZ real House Price Index (right scale)
Source: NZPC calculations using SNZ and RBNZ data.
Figure | Real house prices, population growth 1990-2021
18PART II
Inquiry reports
• Immigration – Fit for the future
• Immigration by the numbers
Supporting work:
• Devine (forthcoming) Migrant selection and outcomes
• Fabling et al. (2022) Migration and productivity
• Fry & Wilson (2022) Planning for prosperity: Transparent and public immigration
settings
• Knopf (2022) Case study: Aged care
• Maré et al (forthcoming) Missing migrants: border closures as a labour supply shock
• NZPC (2021) Supplementary series of six papers
• Schiff (2022) Case study: Construction
• Taylor Fry (2022) Data-led approach to identifying skills shortages
• Whāia Legal (2021) Advice on immigration policy and Te Tiriti o WaitangiIn aggregate immigration has a small positive
effect on productivity and wages in NZ
• Consistent with overseas studies
• GDP growth in NZ has relied on adding more people to the labour force –
both locals and migrants work longer hours compared with OECD
• Productivity is a long game
– Needs sustained investments in physical and community infrastructure, education and
training, workforce development, innovation and supportive regulation.
• Relationship between productivity and immigration
– a balance of trade-offs
– a consideration of short-run and long-run impacts.
• Immigration is not the solution to 21st century productivity challenges, nor
is it the cause of our productivity problemsMigrants make an important
contribution to the economy
• Immigration has more than offset the loss of skilled New Zealanders.
• Immigration has reduced the risk of labour shortages across the
economy – notably in aged care, dairy, IT and hospitality.
• Apart from the GFC, net migration moved in line with net job creation.
90
60
Thousands
30
0
-30
22
-60
2000 2003 2006 2009 2012 2015 2018 2021
Net jobs creation Net migrationNo evidence of systemic labour
displacement from migration
• On average, small positive effects on wages and employment of NZ-born
workers over the last 20 years.
• However, immigration can be negative for certain populations.
– Negative impacts concentrated on people with low levels of skills,
education, and experience, young, including young Māori, Pasifika and
beneficiaries.
– Cost can be very high, felt by individual, whānau and community. It can also
persist (scarring).
• Even these negative impacts are not systematic.
- Occur in particular places at particular times. Same group can experience
positive impacts at different times.
• Pockets of displacement should be targeted with education, training and
empowering active labour market policy.System becomes increasingly unbalanced
• After the GFC, the Government
stimulated economic growth
40
– working holiday visas
– new visa categories
30
– promotion of temporary visas.
Thousands
20
• Led to an unbalanced system
– many temporary workers expecting a
10
pathway to residency
– but no changes to the residency selection
0
criteria 2004 2007 2010 2013 2016 2019 2021
– combined with low rates of emigration to Resident visa Temporary work visa
create…
• High rates of population growth, putting
additional pressure on some aspects of
absorptive capacity 25Migration policy needs to consider
absorptive capacity
• In the short run there are trade-offs.
– The way immigration policy is currently developed risks congestion. Pressure hits if
migration is unbalanced or if not met with investment.
• But in the long run absorptive capacity is not fixed.
– While arriving migrants create demand-side pressure that dominates the supply-side,
over time they become net contributors to the community and the economy’s
productive capacity.
• Rather than limiting migration to manage infrastructure pressures, it
would be better to deal with the root causes.
– Infrastructure Commission research finds that infrastructure is less responsive to
population growth now than in the past.
– Infrastructure is more expensive to build, benchmarking with other countries.Long-term win: Better labour market
information and monitoring
• Improve information around labour shortages
– vacancy indicators of skill shortsage into BOS
– wage pressure information
• Increase informaton and understanding of skills needs and
use of skills
– update ANZSCO/move to ONet
– add citizenship and long term resident informaiton data to IDI
29Long-term win: an immigration
Government Policy Statement (GPS)
• Reflect Te Tiriti o Waitangi in
immigration policy
• Clarify immigration policy objectives
and connections to other government
Investing in absorptive
objectives including capacity to align with
expected population growth
- Education and training policy
- Investments in absorptive capacity GDP growth driven by Clear prospects for
population increases residency to attract
• Set relative priorities balancing the global talent
short- and long-term goals: Uncertainty around
residency prospects Adopting new business
- Explaining how the demand for temporary and models, processes and
residence visas will be managed technologies
Business growth relies
- Supporting infrastructure planning and on more labour
investment, and education, training and labour Investing in capabilities
of New Zealanders
market policies by projecting future migration Filling labour shortages
rates and composition with temporary migrants
• Engage with Māori, communities, and
businesses by compiling data and
performance indicators regularlyThank you
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