Would Immigration influence Economic Growth? (1 Viewer)

[sk8ie_boi]

In 2007 there is an estimated increase in population of 1.3% from immigration. Migrants are imported into Australia as the economy has a shortage for skilled labour. Such increase in population would directly influence our economy’s consumption and investment functions. When our multiplier adjusts that figure, it would have a strong influence on our economy growth. Therefore, influencing an increase (of 7%) in the prices of the Australian housing markets.

In summing up, immigration would have direct influence on the growth of housing prices in Australia. But my problem with such statement is that I believe although immigration would affect economy growth, but comparing to other factors of economy growth, it is very insignificant.

Please correct me if I’m wrong, but I’m really confused on this subject.

 

[nickthebiscuit]

Yep, you're correct pretty much.

Using the ceteris paribus assumption an increase has a pretty strong effect on economic growth. Considering other things factors the effect becomes comparatively insignificant.

P.S. Assuming they go get jobs and partake in the labour force, attracting labour from overseas ultimately does influence economic growth positively.

 

[sk8ie_boi]

But you also need to remember, the population increase is only 1.3%. For those migrants to get a job and therefore eventually having an saving for a deposit would directly depend on the state of the Australian economy. If unemployment was high, and jobs were difficult to find. If interest rates were high, therefore higher mortage. Do you still think those migrants have the power to influence Australia's housing markets?

Migrants should have small or no effect on the economy in the short-run, but as for long-run ... it should have an effect through the multiplier.

 

[Sparcod]

Actually yes it should.

There should be a rise in consumption because of greater demand for goods and services. Another thing is that more people means more skills and more skills means greater productivty and hence rising incomes.

I may've made it too simple here.

 

[nickthebiscuit]

I haven't done all that multiplier stuff yet, but i'll get to it soon.

1.3% of the population roughly > 200,000 individuals which is quite substantial.

The multiplier would probably blow the effect up some more so it's possible. Essentially even if there is a negligible effect, it would still be an effect.