Choosing whether to live in New Zealand or in Australia is a decision that both international migrants and the citizens of both countries often need to make. Both countries operate migration systems that seek to attract the highly-skilled (BusinessNZ 2003) and the citizens of each country are completely free to work and live in either (Bedford et al 2006; Hugo 2004). Recent articles in the popular news media suggest that the best and brightest New Zealanders are moving to Australia at an increasing rate (Collins 2005; New Zealand Press Association 2008a, 2008b, 2008c), and the general sentiment has often been that immigrants use New Zealand as a backdoor to entry to Australia (New Zealand Press Association. 2008d).
In this paper, we use unit record survey data from the 2008 and 2009 New Zealand Income Survey (NZIS) and the 2006, 2007 and 2008 Household, Income and Labour Dynamics in Australia survey (HILDA) to examine four aspects of trans-Tasman migration.
First, we describe how the observed human capital of the New Zealand-born living in New Zealand compares with that of the Australian-born living in Australia, trans-Tasman migrants and other migrants to both countries.
Second, we use regression analysis to estimate the relationship between observed human capital and wages for the above groups, controlling for other factors that are related to individual wages.
Third, we extend this analysis to examine whether the relationship between human capital and wages varies for immigrants from different source countries and by where the human capital was acquired.
Fourth, we discuss how this information can be used to tell us something about whether particular migrants are positively or negatively selected on unobservable characteristics (eg, ambition).
This work is the first part of a larger project that intends to examine for the New Zealand-born and Australian-born as well as immigrants the decision to reside in Australia or New Zealand. The project will examine the role that four possible drivers play in trans-Tasman migration decisions: differences in labour market opportunities; differences in the provision and quality of public services (eg, welfare benefits, health and education); life-cycle concerns such as finding a partner, deciding where to raise children and taking care of one’s parents; and macroeconomic differences in long-term economic growth and in the timing of business cycles.
The overall project is joint work between Steven Stillman at Motu and the University of Waikato, Malathi Velamuri at Victoria University Wellington, Mathias Sinning at ANU, and Deborah Cobb-Clark at the Melbourne Institute for Applied Economic Research.