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GTAP Resource #3220

"Economic Impacts of Immigration: Scenarios Using a Computable General Equilibrium Model of the New Zealand Economy"
by Nana, Ganesh, Kel Sanderson and Rob Hodgson

This study reports on the application of a Computable General Equilibrium (CGE) model of the New Zealand economy to investigate the economy-wide impacts of immigration.

The objective of this study is to better understand the impact of immigration on the New Zealand economy overall and on different parts of the economy. This is achieved by modelling changes to the scale of the immigrant inflow and by changing the focus of immigration to target higher skilled immigrants.

In terms of modelling environment and closure, productivity and world market growth were assumed unchanged on the baseline scenario. Other assumptions are consistent with earlier studies with an unchanged aggregate capital–to–labour ratio, and investment and government consumption demand being fixed relative to GDP.

In general, the results of the model scenarios found that increased immigration:

• reduces production costs
• improves the competitiveness of New Zealand goods and services, benefiting exports
• benefits domestic investment and/or consumer spending, depending on the skills composition of the immigration inflow
• results in higher revenues to government, which outweigh the impact on spending, so translate into an improvement in the balance of the government’s accounts.

The modelling experiments do not support arguments in favour of entirely high-skill focused or targeted immigration inflows. Such targeting does not appear to significantly increase the overall benefits to increased immigration flows.

Of the assumptions tested, additional benefits increase significantly only when productivity improvements accompany the increased immigration inflow. This suggests that if immigration policies or programmes were to target particular skill categories, the focus should be directed to those skills that have significant potential to improve overall productivity.

Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2009
Created: Nana, G. (3/30/2010)
Updated: Nana, G. (3/30/2010)
Visits: 2,457
- Economic growth
- Economic development
- Labor market issues
- Oceania

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