Determinants of the economic outcomes of Australian permanent migrants

Abstract

This paper uses administrative tax and visa data to better understand the factors that predict the economic success of Australian permanent migrants. We show that the economic success of migrants defies simple explanation, with Education, English language skills, occupation, demographics, visa characteristics, temporary visa history and country of birth all playing important roles in explaining employment and earnings outcomes. We use Oaxaca-Blinder analysis to understand the extent to which the difference in economic outcomes across groups of migrants (such as the Skilled, Family and Humanitarian streams) can be explained by observable migrant characteristics (such as education and English language skills). The degree to which outcomes are explained by observable versus unobservable characteristics varies substantially by visa stream and country of birth. We show that migrant integration patterns continue over decades. Shorter-term measures of economic success will overstate the differences in outcomes between migrant groups. Finally, we conduct Oaxaca-Blinder analysis based on the nominated income of employer-sponsored migrants. Nominated income is a better predictor of realised income than a mincer regression based on observable characteristics and is a particularly strong predictor of income for the highest earning migrants.