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Title page
Contents
Executive summary 4
Acknowledgements 5
1. Introduction 8
2. Literature 10
3. Data and descriptive correlations 12
Data and the sample 12
Descriptive evidence: The relevance of migrants in Australia 13
4. Empirical strategy 18
Main econometric equation 18
Endogeneity of the regional migrant share 19
Validity of the instrumental variable approach 20
5. Results 21
Average effect across regions and workers 21
Uneven effects across workers 23
Uneven effects across sectors 24
Robustness checks 26
6. Mechanisms 31
Margins of the employment effect 31
Digging deeper into wage effects 34
7. Concluding remarks 36
References 37
Annex A. Data 40
Annex B. Construction of variables 44
Annex C. Construction and validity of the instrumental variable strategy 45
Annex D. Alternative instrumental variables 49
Annex E. First stage regression results 51
Annex F. Alternative instruments 52
Annex G. Alternative weights 54
Annex H. Margins of the employment effects - 2SLS and OLS estimates 55
Table 1. Average effect of migration on native wages and employment 22
Table 2. Uneven effects of migration by native characteristics 24
Table 3. Uneven effects of migration by sector 25
Table 4. Alternative measures for migrant inflows 26
Table 5. Alternative instrumental variables 28
Table 6. Netting out workforce and regional characteristics 29
Table 7. Alternative geographical units of analysis 30
Table 8. Margins of the wage effect 35
Figure 1. Share of migrants across Australian regions 14
Figure 2. Share of tertiary-educated natives and migrants across Australian regions 15
Figure 3. Correlation between migration and native employment or native wages 16
Figure 4. The regional innovation effects of migration in Australia 17
Figure 5. Subflows of the net change in native employment 32
Figure 6. The regional impact of migration on the inflows and outflows of employed natives 33
Figure 7. The regional impact of migration on the subflows of employed natives 34
Boxes
Box 1. The geographical distribution of migrants 13
Box 2. Migration and regional innovation in Australia 16
Box 3. The drivers of native employment growth in the region 32
Annex Tables
Table A.1. Migrant decomposition in terms of country of origins 42
Table A.2. Baseline variables 44
Table A.3. Alternative measures of the migrant inflow 44
Table A.4. Explanatory variables in 1981 46
Table A.5. Controlling for lagged migration flows 47
Table A.6. Reduced form impact on lagged wages and employment changes 48
Table A.7. Alternative instruments 49
Table A.8. First stage regression results 51
Table A.9. Five-year changes using alternative instrumental variables 52
Table A.10. Triannual changes using alternative instrumental variables 53
Table A.11. Employment effects 54
Table A.12. The impact of migration on inflow and outflows in the labour market (OLS) 55
Table A.13. The regional impact of migration on the inflows and outflows of employed natives (2SLS) 56
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