What Makes Migrants Thrive in Australia?

What Makes Migrants Thrive in Australia?

A new study by Peter Varela and Robert Breunig from Crawford School of Public Policy, ANU sheds light on the factors that influence the financial success of permanent migrants in Australia. Their research, titled “Determinants of the economic outcomes of Australian permanent migrants,” provides valuable insights for policymakers aiming to optimize Australia’s skilled migration program.

Education, English Proficiency, and Occupation

The research emphasizes the crucial role of human capital in migrant success. Possession of a university degree, such as a Bachelor’s, Master’s, or Ph.D., significantly increases earning potential. Strong English language fluency leads to higher incomes, while those who struggle with English may experience a negative impact on their earnings. The type of visa held also plays a part, with skilled migration visas and a history of temporary skilled work offering advantages.

Age, Gender, and Background

Background factors can also influence a migrant’s economic trajectory. Age, gender, and country of origin all have some bearing, with different migrant groups demonstrating variations. While skilled migrants may initially achieve outstanding financial performance, their economic outcomes tend to converge with the general population after roughly ten years. This suggests a potential overemphasis on short-term results when comparing visa groups.

Integration Patterns

The study reveals that different visa groups integrate at varying paces. Skilled migrants, for example, might commence with strong financial outcomes but experience a gradual decrease over time. Conversely, migrants joining family members already established in Australia (secondary migrants) often witness a significant improvement in their economic situation over the long term. Additionally, migrants from English-speaking countries tend to secure higher incomes.

Predicting Future Outcomes

The research employs sophisticated statistical techniques to analyse the financial well-being of migrants. A method known as Oaxaca-Blinder decomposition reveals that approximately half of the income disparity between migrant groups can be attributed to observable factors like education and English language skills. For employer-sponsored migrants, the pre-determined wage (nominated income) serves as a strong predictor of actual earnings, highlighting the importance of accurate wage reporting.

Policy Implications: Optimising Australia’s Migration Strategy

This research offers invaluable insights for policymakers seeking to refine Australia’s migration program. A key takeaway is the need to re-evaluate the points system for skilled migration visas, ensuring it prioritises factors that demonstrably contribute to a migrant’s financial success. Furthermore, the study underscores the value of temporary migration programs as stepping stones to permanent residency, as these migrants tend to achieve better long-term economic outcomes.

Building a More Effective Migration System

The study provides valuable recommendations for streamlining Australia’s migration program:

• Sharper Targeting: Revise the Skilled Occupation List and visa criteria to prioritize occupations with high earning potential.

• Integration Support: Develop policies that facilitate the effective long-term integration of family and humanitarian migrants.

• Leveraging Nominated Income: Utilize nominated income as a more accurate predictor and management tool for the economic contributions of employer-sponsored migrants.

By conducting a thorough data analysis using advanced methods, Varela and Breunig’s research equips policymakers with the knowledge necessary to refine Australia’s migration program. By prioritising education, facilitating migrant integration, and attracting those with high-earning potential, Australia can continue to benefit from a skilled and diverse migrant population.

Date Posted: May 2024

Source: Australian National University