8 Conclusion
The original motivation for this paper was a desire to understand how migration impacts on per capita growth in New Zealand. It is clear from the discussion that the existing literature is deficient in explaining this relationship. The growth accounting framework is not a complete theory of economic growth but it has provided a way to explore the pathways through which migration can impact on growth.
The evidence has shown that migration has significant impacts on labour productivity and labour utilisation but significant questions remain unanswered: what is the magnitude of this impact? What is the true nature of the causality? What are the interlinkages between the skill level of migrants, or the quantum of migration and growth? An accurate assessment of the magnitude of the impact of immigration on economic growth is likely to be unattainable given existing data. A variety of theoretical economic models can be employed but the results are a function of the assumptions that are made at the beginning, which are themselves subject to question. It is difficult to ascertain the extent to which theoretical models of immigration and growth accurately predict reality because the real world picture is confounded by other influences and by continuing policy adjustments which affect the composition of migrant flows.
It is clear that further work remains to be done on the question of migration and economic growth. The area would benefit from strong empirical work that aims to provide policy advice to government on realistic and achievable policy adjustments to improve the returns to growth, while still balancing social policy aims. This paper has captured a discussion of the literature in the area and set out a way of thinking about the questions. More detailed qualitative, but particularly quantitative work remains to be done if those questions are to be adequately answered and to ensure that the debate always takes into account migration patterns.
Overall, it is equivocal whether there is enough robust evidence to support the claim that immigration is always positive for per capita growth. This paper concurs with the observations of the OECD, which stated “there is not sufficient or detailed enough data on the behaviour of the New Zealand economy to give clear answers on the overall effects on per capita incomes of existing residents”. While the evidence suggests small positive net gains from migration, these do not necessarily stack up as an improvement in per capita growth rates. Whether immigration is positive is also dependent on which particular group of people governments are concerned about increasing the welfare of. If it is overall national welfare then the evidence does suggest immigration is positive. But if this is achieved through a lowering of the wages of native workers, albeit while potentially increasing returns to the owners of capital, this distribution of benefit may not be seen as desirable.
As this paper reflects, it may be more helpful to think about migration as an opportunity to increase GDP per capita growth, rather than as a threat that needs to be managed. It has been shown that improving participation and employment rates is likely to have a positive effect on overall GDP per capita and this paper has looked at some indicators that migrants may be making a positive contribution to labour productivity. Questions do remain, such as the expected increase in growth vis-a -vis the government investment required to increase participation and employment rates, or the extent to which the benefits would accrue to natives or to which subset of natives; but the available evidence indicates where policy efforts should be focussed. Ensuring that the settings of the migration system support the improvement of migrant participation and productivity, while balancing social cohesion concerns, is the first step towards improving the contribution of migration towards economic growth per capita. Continuing to analyse, evaluate and refine the system must be the second.
