VCE Economics Unit 4 AOS 2 Immigration policy

Summary

This video explores the impact of skilled immigration on Australia's economy, focusing on how it influences population growth, labor force participation, and productivity. Skilled migrants are seen as a solution to the aging population and skill shortages, potentially enhancing the country's aggregate supply and international competitiveness. However, the video also discusses the challenges of integrating a large number of migrants, such as potential job displacement for locals and infrastructure strains, while acknowledging the benefits to material and non-material living standards.

Takeaways

• 🌐 Skilled immigration is a significant policy area in Australia's economic strategy, impacting population, labor force productivity, and participation rates.
• 📈 The Australian government uses a skills shortage list to determine visa allocations for various professions to address labor market needs.
• 🏙️ Skilled migration is seen as a solution to the aging population issue in Australia, filling skill gaps left by retiring workers.
• 🔼 An increase in skilled migrants leads to a rise in the labor force and the working-age population, which in turn boosts the labor force participation rate.
• 💡 Skilled migrants contribute to higher productivity in Australia by introducing new ideas, innovations, and competition, enhancing the overall output.
• 📊 The improvement in productivity due to skilled migration shifts the aggregate supply curve outward, increasing the productive capacity of the economy.
• 🌍 Enhanced productivity and aggregate supply lead to better international competitiveness and lower production costs, aligning with macroeconomic goals.
• 🏠 The influx of skilled migrants, particularly in cities like Melbourne, raises concerns about infrastructure strain and potential decreases in non-material living standards.
• 🌆 While skilled migration can improve material living standards by increasing access to goods and services, it may also lead to challenges in urban planning and social integration.
• 🤝 Skilled migration contributes to multiculturalism and cultural diversity, which can have both positive and negative impacts on societal acceptance and cohesion.

Q & A

What is the main focus of the video regarding immigration in Australia?

The video focuses on the impact of skilled immigration on Australia's population, labor force productivity, and labor market participation rates.

Why is skilled immigration considered important in the context of the video?

Skilled immigration is important because it helps to fill the gaps left by an aging population and retiring workers, thereby addressing capacity constraints and skill shortages in the Australian economy.

How does the Australian government decide on the number of visas for skilled migrants?

The Department of Home Affairs determines the number of visas for skilled migrants by considering the skills shortage list compiled through industry needs and setting limits on the amount of visas for each skill group.

What is the estimated number of skilled migrants moving to Australia according to the Treasury?

The Treasury estimates that there will be over 600,000 skilled migrants moving to Australia.

How does an increase in skilled migrants affect the population and demographics of Australia?

An increase in skilled migrants leads to a higher population and helps counter the effects of an aging population by replacing retiring skilled workers with new skilled migrants.

What is the expected impact of skilled migration on the labor force participation rate in Australia?

Skilled migration is expected to increase the labor force participation rate as most skilled migrants actively participate in the labor force, thus increasing both the numerator (labor force) and the denominator (working-age population).

How does skilled immigration influence productivity in Australia?

Skilled immigrants bring skills, knowledge, and experience that can lead to innovation and improved productivity among Australian workers, as well as potentially easing skill shortages and increasing competition among existing workers.

What is the connection between improved productivity and aggregate supply?

An improvement in productivity leads to an increase in the productive capacity, which is reflected as an outward shift in the aggregate supply curve, making businesses more willing and able to produce.

How does skilled immigration contribute to Australia's international competitiveness?

By improving productivity, skilled immigration can lower the cost of production, making Australia more internationally competitive and better at producing goods and services for the global market.

What are some potential negative effects of increasing the population through skilled migration on living standards?

While skilled migration can improve material living standards by enhancing productivity and competitiveness, it may also lead to overcrowding of infrastructure, increased competition for jobs, and potential stress on the existing population due to rapid demographic changes.

How might skilled migration affect non-material living standards in Australia?

Skilled migration can introduce new cultures and promote multiculturalism, potentially leading to greater acceptance and diversity, but it may also cause stress and anxiety among the existing population due to the pressures of rapid demographic changes.

Outlines

00:00

🌐 Impact of Skilled Immigration on Australia's Economy

This paragraph discusses the influence of skilled immigration on Australia's economy, focusing on its effects on population, labor force productivity, and labor market participation rates. Skilled immigration is seen as a means to counter the aging population and fill skill gaps left by retiring workers. The government uses a skills shortage list to determine the number of visas allocated to each skilled stream. The influx of skilled migrants is expected to boost productivity and international competitiveness, leading to an outward shift in the aggregate supply curve and the achievement of macroeconomic goals. However, the paragraph also touches on the potential negative impacts, such as increased competition for jobs and strains on infrastructure and services.

05:00

🏙️ The Complexities of Population Growth on Living Standards

The second paragraph delves into the complexities of how an increase in population due to skilled immigration can affect both material and non-material living standards in Melbourne. While improved international competitiveness and productivity could lead to more jobs and better access to goods and services, there are concerns about the city's ability to accommodate such growth. Potential negative effects include overcrowding of public spaces, increased competition for jobs, and strain on infrastructure like roads and hospitals. On the cultural front, the paragraph suggests that increased multiculturalism could lead to both greater acceptance and potential social stress among the existing population.

Keywords

💡Skilled Immigration

Skilled immigration refers to the process of attracting and admitting individuals with specific skills and qualifications into a country. In the context of the video, it is a policy that Australia uses to address skill shortages and bolster its workforce. The video discusses how skilled immigration can impact the population, productivity, and participation rate in the labor market, which are key factors in economic growth and development.

💡Aggregate Supply

Aggregate supply is an economic term that refers to the total quantity of goods and services that firms produce and sell during a specific period. The video script discusses how skilled immigration can influence aggregate supply by increasing productivity and the labor force, which in turn can shift the aggregate supply curve outwards, indicating an increase in a country's productive capacity.

💡Labor Force Participation Rate

The labor force participation rate is the percentage of the working-age population that is employed or actively seeking employment. The video explains that skilled immigration can increase this rate as the migrants who come to Australia are likely to participate in the labor force, thus contributing to the economy.

💡Productivity

Productivity in economics measures the efficiency of production, typically expressed as the ratio of output to input. The script mentions that skilled migrants bring with them skills, knowledge, and experience that can enhance the productivity of the Australian workforce, leading to more outputs from a given level of inputs.

💡International Competitiveness

International competitiveness refers to a country's ability to produce goods and services that are in demand in the global market, while also being able to compete on factors such as price, quality, and innovation. The video suggests that an increase in productivity due to skilled immigration can improve Australia's international competitiveness by reducing production costs and enhancing the quality of its products and services.

💡Macroeconomic Goals

Macroeconomic goals are broad economic objectives that a country aims to achieve, such as stable economic growth, full employment, and price stability. The video argues that an increase in aggregate supply due to skilled immigration can help Australia achieve these goals by improving its productive capacity and competitiveness.

💡Skill Shortages

Skill shortages occur when there is a lack of qualified workers in a particular field or industry. The video script discusses how the Australian government addresses skill shortages by inviting skilled migrants who can fill these gaps in the labor market, thereby supporting economic growth.

💡Visas

A visa is a permit issued by a country that allows a foreign citizen to enter, remain in, or leave the country. The video mentions that the Department of Home Affairs in Australia allocates a certain number of visas to different skill groups to manage skilled immigration effectively.

💡Aging Population

An aging population refers to a demographic trend where the median age of a population increases over time, often due to declining birth rates and increased life expectancy. The video highlights that Australia faces an aging population challenge, which skilled immigration can help address by bringing in younger, skilled workers to replace retiring ones.

💡Material and Non-Material Living Standards

Material living standards are typically measured by access to goods and services, while non-material living standards encompass quality of life factors such as health, education, and cultural experiences. The video discusses the potential impacts of skilled immigration on both material and non-material living standards, including the possible benefits of increased economic productivity and the challenges of accommodating a growing population.

💡Multiculturalism

Multiculturalism is the coexistence of diverse cultures within a society. The video touches upon the cultural aspect of skilled immigration, suggesting that it can lead to a more multicultural society, which may have both positive and negative effects on social cohesion and acceptance.

Highlights

Introduction to the impact of skilled immigration on Australia's economy

Historical context of immigration in Australia is briefly mentioned

Focus on skilled immigration's effects on population, productivity, and labor force participation

Explanation of how the Department of Home Affairs allocates visas based on skills shortage lists

Treasury's estimate of over 600,000 skilled migrants moving to Australia

Skilled migration's role in addressing the aging population issue in Australia

The increase in population due to skilled migration and its economic implications

How skilled migrants contribute to the labor force participation rate

The impact of skilled migrants' skills and knowledge on productivity

The argument that improved productivity leads to an outward shift in the aggregate supply curve

Discussion on how skilled migration can improve international competitiveness

Potential negative effects on material living standards due to increased population

The possibility of job losses for existing workers due to competition from skilled migrants

The impact of population growth on infrastructure and non-material living standards

The cultural benefits of multiculturalism brought by skilled migration

The potential stress and anxiety on the existing population due to increased immigration

Conclusion on the overall positive impact of skilled migration on achieving macroeconomic goals

Transcripts

hello economic students in this video

we're going to move on to our next

aggregate supply policy the second last

dot point of the study design of the

whole course and its skilled immigration

uh Australia has a really interesting

good and a bad history of immigration

into Australia and I think it's worth

going back and having a think about the

different changes in Immigration

patterns into Australia that's obviously

very important in our history we're not

going to do that in that in this video

we're going to think about how skilled

immigration impacts the population the

productivity of our labor force and the

participation rate in the labor market

from there we need to make our standard

aggregate supply argument so once we see

an improvement in productivity and the

participation rate how does that impact

the productive capacity aggregate supply

International competitiveness our three

macroeconomic goals and living standards

yeah that sounds like a lot but it's the

same argument we make every time

so

don't need to know too much about what

happens in Australia in terms of

migration and the policies around how

migration works but I think it helps to

have a little bit of contact context

so each year the department of Home

Affairs they sit down they look at the

skills shortage list uh which has been

compiled through industry and they work

out how many visas they're going to

allocate to each skill group or each

skilled stream so they might say uh we

need 20 000 doctors we need 50 000

nurses and they set a limit on the

amount of visas that they will issue

over the next two or three years

treasury has estimated there'll be over

600 000 skilled migrants moving to

Australia many of those those will end

up in Melbourne in our great City

and really all we need to think about is

how would having six hundred thousand

skilled migrants moving to Australia how

that impact those Aggregates apply

things that we always think about so we

focus only on the skilled stream skilled

migration uh there are lots of other

skilled visas there's family visas

business visas Innovation visas and so

on we don't need to worry about those

so how does skilled migration impact

population well of course more people

coming to Australia increases our

population but why is that important

and the demographics of Australia has

led to this phenomenon called well not

really cold but an aging population

where we have a big chunk of skilled

knowledgeable experienced workers

leaving the workforce leaving the labor

force and retiring at the same time and

that's a problem for the economy it's

great for those people who are retiring

and who have worked hard to retire maybe

even some of your parents soon but it

leads to capacity constraints and

shortages in the Australian economy

right we lose a whole bunch of skills

and knowledge and the best way that the

government seed to replace those skills

in knowledge is to bring in skilled

migrants from overseas who have that

skills and knowledge from another

country so it increases population but

it also fills the gaps that have been

left by Australians leaving the labor

force because they're getting old

how does it affect the participation

rate uh well almost all of skilled

migrants who come to Australia

participate in labor force obviously

because that's why they're coming to

Australia which will lead to an increase

in the participation rate so we would

say if there's an increase in both the

labor force and the working age

population if we calculated that in

times that by a hundred if we increase

both the denominator and the numerator

we'll get an increase in the percentage

or an increase in the participation rate

whoops wrong way finally we have to

think about how it impacts productivity

and of course the skilled migrants that

come to Australia have skills and

knowledge and experience they they

innovate they come up with new ideas and

so that improves the productivity of

Australian workers and maybe even

Capital they also feel skill shortages

and increased competition amongst

existing workers all of which is to say

that it will improve productivity

because we'll get more outputs from a

given level of inputs

okay

so once we get to an improvement in

productivity it's the same argument we

made with education as soon as you can

say there's an improvement in one of the

aggregate supply factors which of course

productivity is we go straight from

there and we say well businesses can

produce more they're more willing and

able to produce which is good it's

another way of saying there's an

improvement in the productive capacity

or an increase in the productive

capacity the aggregate supply curve

shifts outwards we come we become more

internationally competitive we can say

our cost of production goes down and

therefore we achieve all three

macroeconomic goals in the longer term

so this argument here is not new it's

something we've made in every video on

aggregate supplier thus far okay it gets

a little bit tricky when we think about

material and non-mature living standards

because there are some negative effects

of bringing 600 000 people into

Melbourne uh Melbourne's predicted to

have 10 million people living in it I

don't know when in 20 years or something

it's certainly not built for 10 million

people so there are some issues right

so how does it impact material living

standards our access to goods and

services well if we can improve

International competitive

competitiveness if we can bring some of

the best people around the world into

Australia we get better at what we

produce and we can produce it for a

lower cost

and if we can sell those services or

Goods back into the global market

it's going to create more jobs for

Australians and that improves our access

to goods and services

Industries may be hurt so certain

industries may actually face a decline

um and certainly one of the arguments is

that Australians who already live here

may lose their job May

um you know face competition from

overseas workers and that may lead to

job losses absolutely not happening at

the moment because we have very high

vacancy rates there's heaps of jobs

available uh it could also hurt our

access to infrastructure my school in

particular has got a lot of population

green spaces get overcrowded roads get

overcrowded hospitals doctors all that

sort of thing so it could be a decrease

there in terms of non-material living

standards certainly brings with a new

culture and Multicultural

multiculturalism it could lead to more

Acceptance in Australia

but it could also put pressures could

put Stress and Anxiety on the existing

population so you can think about the

benefits or the negatives from the

material living standards perspective

all the other things it's good for

improves aggregate supply achieves all

our goals

all right reach out if you've got any

questions and bye for now