Mar

16

Migration and recession

March 16, 2009 | 6 Comments | Joshua Gans

The government is going to cut skilled migration by 14% this year. That is actually a big cut because there is not that much of this year left. It is supposedly worried about there being jobs for them or for other skilled workers. Although why a firm would want to employ a skilled worker from overseas rather than an unemployed and surely cheap worker from Australia is byeond me. It hardly seems a real threat to warrant changing the quota.

But more ludicrous are suggestions that this will be somehow good for the economy. Shane Oliver thinks it will ease pressure on rents. Come on, we are in a recession. Rents will go down with the economy regardless of whether a few extra migrants come in or not. It has been a while since I looked at this but there is no correlation between rents/house prices and migration rates save for the fact that a strong economy encourages both.

What is more, an employed skilled immigrant is likely to be a spender rather than a saver as you need to buy durable goods. That will stimulate the economy. Once again, we see too many people blindly nodding their heads that protectionism is in the interests of the macroeconomy when it hardly seems obvious at all and likely falls more on the pandering to voters front.


Comments

6 Responses to “Migration and recession”

  1. Alan Collett on March 16th, 2009 12:53 pm

    Added to which:

    1.  The lag between visas being granted and individuals moving to Australia is months if not years.  Migrants arriving over the next 12 months are likely to be part of the migration program from the last 2 years.

    2.  A family of (say) 4 equals 4 visa grants.  Cutting back the number by 18,500 might make for good headlines (particularly in the a week of the QLD election), but the actual number of skilled individuals affected will be somewhat less.

    Best regards.

  2. They took our jobs : Core Economics on March 16th, 2009 2:05 pm

    [...] Migration and recession [...]

  3. maxinquaff on March 16th, 2009 4:17 pm

    What I don’t understand is why the protectionist card has to be played at all with gvt approval so high. Had anyone been bashing Labor for it before, or is this just heading-off potential Liberal criticism? The Minister deserves an angry letter.

  4. Steve McLeod on March 16th, 2009 5:40 pm

    Does demand not affect rent prices? More immigrants results in greater demand for accommodation, I would think?

  5. Lefty on March 16th, 2009 6:07 pm

    Migrant workers are always desirable Joshua, because you can circumvent unions.

  6. MikeM on March 16th, 2009 10:09 pm

    “But more ludicrous are suggestions that this will be somehow good for the economy. Shane Oliver thinks it will ease pressure on rents. Come on, we are in a recession.”

    Is that right?

    SYDNEY’S suburban rental squeeze is easing thanks to first-home buyers and investors returning to the city’s property market.
    The Reserve Bank’s interest rate cuts and increased home owner grants have resulted in the highest number of vacant rental properties in Sydney’s west since August 2007.
    Vacancy rate figures to be released today reveal the percentage of available rental properties 25km or more from the CBD increased by 0.3 per cent in January to 1.7 per cent.”
    Fan-bloody-tastic. Oh what a lovely recession!
    “The other change in January was in the middle suburbs, which fell 0.2 per cent to a vacancy rate of 1.3 per cent, keeping the overall Sydney average stable at 1.4 per cent.”

    The main factor in the outer suburbs is the first home owners’ grant for newly built homes, which is reducing demand for rental properties.

    http://www.theaustralian.news.com.au/story/0,25197,25108072-5006786,00.html
    Until the recession reaches a point where people are forced to live in cardboard boxes in the gutter, it will not make a big difference to the rental market.