published in: Journal of Population Economics, 2003, 16 (4), 655-681
Two separate cohorts of immigrants to Australia are compared in order to assess the
potential role of immigrant selection criteria, labor market conditions, and income-support
policy in facilitating the labor market adjustment of new arrivals. Although these two cohorts
entered Australia only five years apart, their initial labor market outcomes varied dramatically.
The results indicate that changes in immigration policy may have led to increased human
capital endowments that in turn resulted in higher participation rates and reduced
unemployment. At the same time, improvement in Australian labor market conditions and
changes in income-support policy over the 1990s – which most likely altered the returns to
human capital – were probably instrumental in reinforcing the effects of tighter immigrant
selection criteria. As much as half of the fall in unemployment rates among women and one
third the decline among men appears to have occurred as the result of changes in the returns
to demographic and human capital characteristics.
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