Countries around the world are locked in a struggle to attract top talent. This competition has sparked innovative approaches – from the European Union’s Talent Pool – to digital nomad visas. But what impact do these strategies have on regional labour markets?
Why do migrants flock to Australia?
Australia shines as a beacon of opportunity, boasting the third-highest share of migrants among OECD countries. The allure of the “Land Down Under” isn’t just in its stunning landscapes or laid-back lifestyle, but in the country’s robust economy, inclusive society and promise of progress.
It is an offer – and an opportunity – that Australia has been keen to promote. In recent decades, Australia shifted its migration policy towards prioritising workers vital to its national and regional economy. By actively inviting migrants specialising in critical and tight sectors such as healthcare and education, Australia ensures a steady influx of skilled professionals to address labour market shortages.
The share of migrants is highest in cities
Share of migrants across Australian SA4 regions, 2021
Source: Australian Census of Population and Housing 2021 accessed via ABS Census TableBuilder.
Note: The figure presents the share of foreign-born people among the working-age population (15-64 year-olds) in Australia, disaggregated by region. Data are for 2021. The Australian Bureau of Statistics (ABS) designated 89 Statistical Areas (SA4) covering the whole of Australia. SA4 regions were designed with a functional purpose to represent regional labour markets.
Despite challenges, migrants are shaping Australian regions
Australia’s migration strategy has helped position the country as a global leader in migrant integration. With approximately 1/3 of its working-age population originating from overseas, Australia boasts a higher share of migrants compared to prominent migration destinations such as Canada, Germany, the UK or the USA.
Migrants in Australia are highly educated, with around 60% holding tertiary qualifications – the second-highest rate in the OECD after Canada—surpassing the native population’s 40% educational attainment.
In thriving urban hubs like Melbourne and Sydney, most migrants possess university degrees. This educational advantage has become a driving force behind Australia’s regional economic growth and innovation.
Recent OECD evidence reveals that when given the opportunity, migrants are creating new opportunities not just for themselves, but for native Australians. We found a 1 percentage point increase in the number of migrants arriving in Australian regions boosts the number of employed natives by 0.5%. Importantly, this increase benefits all Australians in the region, regardless of their education, age or occupation.
Migrants are also at the heart of Australia’s creative advances. Their unique skills and perspectives have boosted patenting activity. We found that an increase in the number of migrants with a university degree boosts patent applications by 4.8% over the next five years. Unsurprisingly, those in scientific occupations have an even higher impact, but migrants across all education levels contribute to regional innovation.
Yet, integrating migrants isn’t without its challenges. The data also show that despite their qualifications, Australian immigrants are less likely to be employed than their native counterparts, largely owing to lower labour-force participation among migrant women. While this might be linked to labour market restrictions, research on other countries hints at barriers related to childcare opportunities and lengthy recognition processes of foreign degrees.
Shaping Australia’s tomorrow
In the race for global talent, Australia is not just participating, it’s leading the way. Our data shows this strategy is paying off for its regions as well as the country, paving the way for future prosperity.
Cem Özgüzel is an Economist at the Organisation for Economic Co-operation and Development (OECD). Cem is an applied economist with research interests focused on international migration, labour markets and regional economics. He holds a B.A. in Economics from Galatasaray University, a M.A. in Applied Economics from University of Paris 1 Pantheon-Sorbonne and a Ph.D. in economics from Paris School of Economics.
Jasper Hesse is a Junior Economist at the OECD Centre for Entrepreneurship, SMEs,Regionsand Cities. At the OECD, he is working on regional effects of migration, locallabourmarkets, innovation, and regional economic development. He holds a Master’s in Economicsfrom the University of Mannheim, Germany.