The Impact of Immigration on the Wage Differential in Australia

This paper investigates the impact of immigration on the wage differential between skilled and unskilled labour using simulation analysis from a dynamic intertemporal general equilibrium model. The results show that immigration cannot explain variations of the wage differential in Australia during the past 10 years. In most of the years investigated, immigration only explains a small part of the change in the wage differential. There is also no evidence that immigration exerts significant downward pressure on the unskilled wage.