What is the net effect of immigration on labour supply and employment?
In May 2008 the federal government proposed increasing migration as a way to meet labour shortages and gear Australia for what was seen as the new global competition for workers. (Kelly P. ‘Rudd taps global labour pool’, Australian, 17/5/08), and in October reduced immigration was seen as a way to respond to feared rises in unemployment [1]. These proposed changes seems to be based on assumptions about the effect of immigration on labour supply which may or may not not be correct – given the impact that migration has in itself creating a demand for (and thus absorbing labour in supplying) housing, services and infrastructure. SE Queensland’s economy (for example) has been affected by high rates of interstate migration for 30 years and a very simple calculation by the present writer 10 years ago suggested that this process was internally self-sustaining (ie that the provision of houses and services for ever-increasing numbers of migrants employed a workforce roughly equal to the labour
