Students from overseas who get a degree and stay in Australia as well as international graduates who move to the country to work are making a larger contribution than ever to the nation's workforce, new research shows.

A new report from the Australian Council for Educational Research shows that in 2015 there were 4.5 million people in Australia with a bachelors degree or higher, of which 22% had been born and educated overseas and 21% had been born overseas but educated in Australia.

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The analysis by Julie McMillan, Daniel Edwards and David Phillips found skilled migration had contributed significantly to the availability of people with degrees in the workforce.

But the report points out that while the current situation has helped to create a largely successful and diverse workforce during the past decade or so, planned changes to scale back temporary skilled migration and pathways to permanent residency may have an impact.

'The point behind the report was to articulate more clearly the way in which the innovation economy requires a balance between the output of our universities and skilled migration. It is almost impossible to get the balance exactly right, but it has been working well over many years,' said Edwards.

The research found that the Australian higher education system contributes significantly to Australia's degree qualified population and skilled migration is playing a strong role as more than one in five degree-qualified people in Australia are migrants.

It also found that degree qualified migrants are arriving at a faster rate than growth in domestic university graduates, but graduates from the Australian higher education system continue to have better labour market outcomes than skilled migrants.

Edwards explained that while the tightening of Australia's skilled labour market in recent years has negatively affected both skilled migrants and domestic graduates, skilled migrants experience poorer employment outcomes.

Data from the Australian Bureau of Statistics reveal that the labour force participation rates of skilled migrants at 80% is considerably lower than for people with an Australian degree at 90%.

The proportion of the degree qualified workforce employed in full time professional occupations was higher for Australian born and educated people at 79% compared to 71% for people born overseas who completed their degree in Australia and 68% for skilled migrants.

Edwards said locally produced graduates and those imported from overseas had contributed to a strong rise in the number of skilled people in the population in recent years and there has been major growth in skilled employment.

However, the report says there is now evidence of a tightening in the skilled labour market for everyone. In 2014/2015, Australia experienced a net gain of 33,590 persons with permanent skill visas and 10,260 with 457 visas.

Edwards said proposed changes to the visa system were intended to better target skill shortages, while addressing perceived threats to available jobs for locals, but it was important to understand the dynamics at play in the graduate labour market. He added that more research was needed to look at how all degree holders fared in particular industries and by fields of education.