In this paper, unit record survey data from the 1997–2009 New Zealand Income Survey (NZIS) is used to examine:
- how labour market outcomes and returns to human capital vary in the immigrant and non–immigration populations in New Zealand
- whether these returns vary over time and across business cycles.
First, regression analysis is used to estimate the relationship between education and employment, hours worked, and wages for immigrants and the New Zealand–born separately for men and women, controlling for other factors that are related to individual wages. These relationships are allowed to vary over time to see whether any variation is systematically related to business cycles or other macroeconomic variation.
Second, the same approach is then used to examine the relationship between education and labour market outcomes for immigrants and New Zealand–born with different ethnic backgrounds and from different source countries, again separately for men and women. This part of the analysis extends previous work by Stillman and Velamuri (2010) to simultaneously consider the relationship between immigrant status and ethnicity, and labour market outcomes.
This extends the analysis undertaken in Stillman and Velamuri (2010) and previous work by Dixon (2000), Maani (2004), Hyslop and Maré (2009) and Stillman and Maré (2009) among others by examining how labour market outcomes vary by gender, ethnicity, and immigration status in the same empirical framework and by extending the analysis to 2009.
Key Results
Overall, these results indicate that in regards to employment rates, it is immigrant status rather than ethnicity that is driving poor outcomes for Asians and Pasifika in New Zealand.
When interpreted with the evidence from the first analysis that immigrants at all levels of education have lower employment rates than equivalent New Zealand–born, these results are consistent with Asian and Pasifika immigrants having worse job networks or higher reservation wages, perhaps because of different family obligations, less access to informal childcare, or being impacted by labour market discrimination.
It is also possible that lower employment rates occur because these immigrants have lower effective human capital than equally educated New Zealand–born, perhaps because of poor English language skills. However, in this case one might expect to find larger employment differences among less-educated migrants since this is presumably the group for whom poor language skills are most common.
On the other hand, in regards to wages, Māori, Pasifika, and Asians are found to have much lower wages than individuals with European or Other ethnicity regardless to whether they are immigrants.
When interpreted along with the evidence from the first analysis that it is only less-educated migrants who have much lower wages than equivalent New Zealand–born, these results suggest that labour market discrimination may play an important role in wage setting among less-educated Māori, Pasifika, and Asians in New Zealand. However, other possible explanations, such as lower quality education, worse job networks, or occupational segregation could also explain these findings.