RBA proves nonexistent link between immigration and wages

The Reserve Bank has released a document by its Economic Analysis Department (EA), baselessly blaming immigrants and their partners for Australia’s wage growth stagnation without providing any credible data or evidence.

The document referenced below has a few charts but none of them anyhow substantiate or point to its repeated claims of the relationship between immigration and wage growth.

The document is likely what Reserve Bank governor Philip Lowe referenced in his early July speech to the Economic Society of Australia when he claimed closing Australia border for longer would lead to higher wages.

Research by the Australian National University (ANU) economists previously found no evidence the labour market outcomes are negatively related to immigration.

Wages growth in Australia is among the worst in the industrialised world against the backdrop of the near 30-year-long uninterrupted economic growth with low unemployment.

Inflation-obsessed RBA has consistently, but in vain  implemented controversial policies to artificially increase cost pressures over the past years to keep wages moving. Instead, its efforts have so far backfired to either lock Australians out of the housing market or lock them to until-death mortgages in the world’s most sparsely populated nation. You can read more on this here.

Extracts from the newly released document:

“Over the past two decades, Australian immigration policy has supported high levels of migration of both skilled and unskilled working-age persons. This has expanded the labour supply. The impact on spare capacity and wages is different for skilled and unskilled workers”.

“The largest growth in migration by far has been for unskilled migrants, primarily students, working holiday makers and family visa holders. These migrants have partial or full work rights and tend to work in the lowest paid jobs, for which domestic labour is relatively easily substitutable.”

“Skilled migration has become increasingly targeted to filling jobs for which there is not an immediately available domestic substitute. Occupations open to skilled immigration have wages significantly above the national median. Immigration of the primary skilled visa holder is likely to lessen wage growth pressures in these occupations, while having a marginal impact on spare capacity; in particular, it might marginally increase spare capacity by reducing incentives for employers to invest in available but poorly matched domestic labour supply.”

“A significant part of the permanent migration stream is comprised of the partners of skilled migrants, for which there are no skill requirements but full work rights. This increases spare capacity, as these secondary migrants do tend to participate in the labour market and have characteristics similar to incumbent workers”.

You can find the released document here: Documents since 1 January 2019 about the relationship between immigration and wage levels.