Inter-state migration in Australia and immigration

Australian residents are moving less. Jeff Borland’s latest labour market snapshot has a focus on inter-state migration (H/T Matt Cowgill).

His key points are:

  • “The rate of inter-state migration in Australia has declined over the past decade.
  • The decline has been mainly accounted for by decreasing migration amongst the population aged 15 to 34 years.
  • The decline in inter-state migration in each state has been largely in proportion to its share of the Australian population; although arrivals to Queensland have decreased disproportionately.
  • The decline in inter-state migration over the past decade does not appear to be explained by a slower rate of reallocation of employment between states.
  • There is some evidence, however, to suggest that less inter-state migration may have been necessary due to a better match between state-level net overseas migration and state level net job creation.”

One of the most prominent complaints by industry during the pre-GFC boom was the inability to find people to do jobs in certain locations. These calls grew louder as the construction boom continued post-GFC in parts of WA, QLD and NT.

Borland’s summary of inter-state migration provides some support for this position. Inter-state migration has declined over the past decade. But I don’t think we should allow this specific industry narrative to dominate too much. Personally I think they had some warning about this given investment decisions. It can be argued there was a time period where the issues of labour scarcity were known and not enough was done about it. However given the magnitude of the increase in construction in remote areas, perhaps this was a losing battle from the start.

Away from impossible to prove claims. Borland shows evidence that a better match between state-level net overseas migration and job creation may have had an effect on the movement of Australian residents.

I’m sure this is right. Increasingly immigration is employer-based, allowing migrants to move directly into work as required through labour demanded. In fact, migration researchers may wonder why the size of the effect isn’t greater, given the sharp increase of temporary, “demand-driven” migrants entering Australia. The transformation has been incredible and I would have thought a major impact on lower rates of Australian movement.

From a migration policy perspective, increasing the match between job location and migrants is a no brainer. This means migrants can settle better as they have employment and support. Yet outside of migration policy, this raises interesting questions. Is this good for the labour market as a whole, given new temporary migrants are a small percentage of total labour market?

What is the downside of lower rates of inter-state migration by Australian residents? This is particularly relevant in an environment of rising unemployment and a participation rate which is falling. I don’t have much knowledge in this space, but I imagine if labour market trends are fairly equal across states then the impact on Australia residents is lowered. However if the labour market trends are unequal across states, perhaps immigration may be a more negative trend as people without work are moving less to areas where there are work.

It’s also important to remember other factors may also be playing a significant role. In the U.S., rates of internal movements have fallen to their lowest since World War Two. Hypotheses range from job creation, housing finance and a more homogenous labour market – the rise of the service sector and the decline of manufacturing. Further, a decline in mobility may be a good thing in particular contexts. Social and community factors, difficult to account for when assessing the impact of movement, may benefit from stability instead of movement.

Whatever is behind these trends in movement, the figures are fascinating and open up a set of really interesting questions. As immigration trends are still rising, the effects on the labour market are yet to be fully understood and deserve a bit more attention from policy makers. I wrote previously how Tasmania and Victoria show a very different profiles in relation to immigration trends when compared to national data. A part of the ongoing discussion about how local economics such as Tasmania are struggling should incorporate these facts about movement and migration, too often a topic overlooked completely.

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