Points of Difference: Does the Skilled Migrant Category Points System Predict Wages?
Executive summary
Background
The Skilled Migrant Category (SMC) is a points-based policy that allows people to gain permanent residence in New�Zealand if they have the ability to contribute to New�Zealand economically and socially. More migrants are approved for residence in New�Zealand under the SMC than any other immigration category, with approvals making up in excess of half of all people approved for residence.
The research on which this report is based examined how the employability and capacity-building factors that are used to select among SMC applicants are related to the wages earned by SMC migrants 3�years after taking up residence. The report goes on to draw implications and make recommendations for SMC policy.
Method
The Longitudinal Immigration Survey: New�Zealand (LisNZ) documents the outcomes of migrants up to 3�years after taking up residence in New�Zealand and, for the first time, the visa category under which migrants were approved and other detailed information.
LisNZ is used to assess what points applicants were eligible for in the SMC points system. Regression models are then used to examine how the SMC points and a set of other factors are associated with wages. Finally, improvements in the allocation of points are considered, using the wages earned by migrants as a measure of their contribution to the country.
Results
Qualifications have positive returns
Among skilled migrants, qualifications have positive returns, but New�Zealand qualifications are not more rewarded than foreign ones.
Migrants granted residence with a job offer earn at least as much as those already employed in New�Zealand at the time of application
In the medium term, migrants who were granted residence with a job offer earn at least as much as those who were already employed in New�Zealand at the time of application.
Wage increases for New�Zealand work experience are low
Additional increases in wages for New�Zealand work experience compared with foreign work experience are found to be low.
English language ability and skill level are not rewarded under SMC
Self-reported English language ability (additional to a minimum standard) and the skill level of the current or previous job are positively associated with wages, but are currently not rewarded under the SMC points system.
Asian and Pacific skilled migrants earn less than other skilled migrants
In line with previous studies of migrants' outcomes in New�Zealand, skilled migrants from Asia and the Pacific earn less than other skilled migrants even when factors such as age, qualifications, work experience, and self-reported English language ability are controlled for. Further work is needed to better explain this difference.
Practical recommendations
Practical recommendations for the SMC are:
- simplify the system by changing the grouping within categories and joining several categories
- improve the ranking of applicants by:
- differentiating between skilled and highly skilled migrants
- increasing the required level of English or awarding additional points
- adjust the points weighting by awarding:
- more points for high levels of relevant work experience
- fewer points for vocational qualifications.
These changes could improve the selection of migrants who are more likely to earn higher wages in the medium term.
Further work
Further work could assess the association between the points framework and other objectives of the SMC policy. The potential impacts on other policy objectives also need to be considered.
