Academic calls for skilled job shortages to be auctioned to overseas workers

by Ray Clancy on September 19, 2011

in Australia Immigration, Jobs in Australia

Skilled jobs to be auctioned

Auctioning off permanent migration places could raise considerable funds for Australia that could be spent on improving public infrastructure, it is claimed.

The country should capitalise on its attractiveness to migrants, according to economist Stephen Kirchner, a research fellow at The Centre for Independent Studies and a senior lecturer in Economics at the University of Technology, Sydney Business School.

In a new paper, Hands, Mouths and Minds: Three Perspectives on Population Growth and Living Standards, published today, Monday 19 September, he argues that an auction system would more efficiently fill the nation’s skills gaps, thereby eliminating the lag that occurs when it is left to bureaucrats to try to estimate future demand for specific skills.

He says that there is little argument that population growth and immigration have contributed to extensive economic growth, that is, growth in the size of the Australian economy. But there is much less agreement on the crucial question of whether population growth and immigration have also made a positive contribution to intensive growth, that is, growth in real national income per capita, a widely used proxy for living standards.

He also says that there are different views, Hands, Mouths and Minds. Some economists, the Hands, view the past and prospective contribution of population growth to long run growth in real living standards as being either broadly neutral or slightly negative but others, the Mouths, say that population growth can cause living standards to stagnate or even decline by placing increasing demands on current and future output and resources.

While the Minds perspective, by contrast, argues that the main contribution population growth makes to living standards is via an increased supply of ideas and innovations. From this perspective, population growth, given appropriate institutions and incentives, not only contributes positively to productivity and rising living standards but is also the main driver of these improvements in the long run.

‘Australian economists have for the most part relied on the Hands and Mouths perspectives in arguing either for or against population growth and immigration. However, neither of these perspectives offers clear or compelling conclusions about the implications of population growth for long-run living standards,’ says Kirchner.

‘Economists and policymakers need to change the way they think and talk about the role of population growth in driving economic growth by adopting the Minds perspective. Immigration should be regulated to capture the long run dynamic benefits from population growth rather than to correct short term labour market imbalances,’ he explains.

‘The permanent migration programme should be allocated via competitive auction to minimise inefficient non-price competition for permanent migration rights and to enable government to better capture and redistribute the economic rents attached to these rights. Occupations in high demand will automatically attract higher bids from those with relevant skills,’ he adds.

He also says that it doesn’t necessarily mean only the richest migrants would win places because potential employers would be prepared to augment the bids of candidates likely to offer them a good return on investment.

The funds raised would be significant, he says. ‘People smugglers are asking $60,000 from asylum seekers, which is an indication of the value being attributed to living in Australia,’ he says.

‘It is the reverse of the brain drain, where Australians going overseas are seen as a loss of human capital. We should see immigration as a brain gain, an influx of human capital.’

He also believes it is counter productive to encourage more overseas workers to move outside the main capital cities. ‘The high urbanisation rate is a source of economic strength rather than weakness. Policies that aim to decentralise population and economic activity are likely to be counter productive,’ he explains.

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: