CoPS/IMPACT Working Paper Number G-115

Title: The Effects of Immigration on Residents' Incomes in Australia: Some Issues Reconsidered

Authors: Matthew W. Peter and George Verikios


This paper outlines the standard neoclassical model (SNM) of the impact of immigration on the incomes of the resident (pre-immigration) population. We augment the SNM to allow for foreign ownership of and government equity in the capital stock. Using the expanded model, four back-of-the-envelope (BOTE) calculations are made. The calculations reveal that the size of the Berry-Soligo welfare triangle is small and is dominated by the effects of foreign ownership of capital and government equity in capital. In our preferred scenario, the BOTE calculation indicates that the 1991-92 Australian immigrant intake reduced residents' income. We believe the results of the BOTE calculations justify a more comprehensive study incorporating a range of other influential factors determining the impact of immigration on residents' income. We suggest a list of such factors and report on work done in these specific areas. Essential to a comprehensive study are the integration of results from studies in specific areas, and the devotion of resources to the tasks of further data collection and model development.

JEL Classification: F22, D33, D60.

Please cite the later published version in:
The Australian Economic Review, vol. 29, iss. 2, 1996, pp. 171-88.

Keywords: immigration, residents' income, capital mobility, government equity, Berry-Soligo effect.

Working Paper Number G-115 can be downloaded in PDF format.

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