NZ must keep the door open to migrants
23 June 2020
Opinion: NZ must remain open to migrants and the potential they bring, while also encouraging talented international students to stay, writes Steven Poelhekke.
A backlash against migration around the globe continues to strengthen and, in some cases, is starting to affect actual policy. New Zealand should not fall into this trap. We must remain open to the potential that migrants bring to this country and we must equally encourage our talented international students to stay on when they have completed their studies.
Debate on immigration quickly boils down to a common misconception: immigrants take jobs from domestic workers. This is a misconception because new immigrants and domestic workers rarely compete for the same jobs. In reality, immigrants who, for example, do not yet have language or customer facing skills may take up jobs that domestic workers tend not to desire, such as fruit picking, cleaning, and sewing. When we return to a post-Covid normality, New Zealand will find immigrants in high demand again in agriculture and hospitality. It is highly unlikely they will be displacing domestic workers in these roles.
Recent economics research points even to the opposite: immigration creates more jobs than existed before, and it can make existing jobs pay more, because the skills of immigrants and domestics workers are complementary and thus create value. In the UK, a 1 percent point increase in the population share of foreign born leads to an increase of between 0.1 percent and 0.3 percent in average wages and positive effects on wellbeing and welfare, and immigrants contribute far more in taxes than they receive in benefits. In addition, immigration is associated with an increase in exports to immigrants’ countries of origin by using the contacts and networks that migrants have overseas.
The reason is that immigration makes it possible for workers to specialise in what they do best. For example, there is only so much time in a day, so what if you could let someone else do some of your tasks? At home for example, this may be babysitting, cleaning, mowing the lawn. Since immigrants, including those still studying at our universities, increase the supply of such services, it lets parents both work and increases women’s participation in the labour force. In businesses, it increases efficiency if each worker focuses on what they do best, letting other workers, be they immigrants, workers located offshore, or even automated computers do other tasks.
But there is more. Migrants increase innovation and patenting, and in particular in areas that their home country excels at. The typical US-university affiliated Nobel-prize winner was not born in the US. In New Zealand, 17 percent of inventors are immigrants, which is close to the US figure of 18 percent and above Australia’s 11 percent. Immigrants thus also import and generate knowledge, reshaping patenting activity in the destination country, moving it towards new technologies.
This is not surprising if you think about who migrants are. Who makes it all the way to New Zealand and overcomes all hurdles? Someone with perseverance, ambition, and ingenuity.
Fletcher Building was founded by a Scot, and most of the farmers that formed the cooperatives that later became Fonterra were immigrants. More famously, Tesla, Google, and Ebay were founded by immigrants to the US. Such new and growing businesses create more jobs than established businesses. Let our current international students also stay and create businesses.
It is true that if a domestic worker does specialise in a job that migrants tend to do well too, then the job may be contested. The way out is to upskill and change to another job. That is precisely what domestic workers have done to remain employed, further raising productivity for all.
Overall immigration creates growth, jobs, and income, creating many more winners than losers among domestic workers even when it poses challenges for some. In face of competition from automation, offshoring or immigration, going to school and finding a new profession is key to success.
In the US, and even before Covid-19, it has become much harder to obtain a work visa, and international student enrolment at US universities is declining as students look to Canada and other destinations. New Zealand is a country built on immigration. Let New Zealand step up and welcome these international students and allow them to stay afterwards and create businesses. Among them are the skills, start-up creators, innovators and employers of tomorrow.
Professor Steven Poelhekke is Head of the Department of Economics at the Business School.
This article reflects the opinion of the author and not necessarily the views of the University of Auckland.
Used with permission from Newsroom NZ must keep the door open to migrants 23 June 2020.
Alison Sims | Research Communications Editor
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