Immigrant unemployment: the Australian experience.

Abstract

Between 1980 and 1996 both male and female immigrants experienced higher unemployment rates than Australian‐born workers. In 1996, for example, the unemployment rate for the overseas‐born was 9.8 per cent, compared with 8.1 per cent for the Australia‐born. A multivariate analysis is used in this article to examine unemployment rate differentials between Australia‐born and immigrants from English‐speaking countries and immigrants from non‐English‐speaking countries. A feature of the analysis is decomposition of unemployment rate differences between birthplace groups into a component attributable to the different characteristics of the birthplace groups (e.g. different mean levels of education) and a part that is viewed as an impact associated simply with being foreign born.The analyses reveal that the principal factors that influence employment success in the Australian labour market are educational attainment, age, qualifications and, among the foreign‐born, duration of residence in Australia and English language proficiency. Also, unemployment rate reductions associated with additional years of education are not as large for immigrants from non‐English‐speaking countries as they are for the Australia‐born or for immigrants from English‐speaking countries.The results suggest that if immigrants’ marketable characteristics were rewarded in the labour market in the same way that the Australia‐born’s characteristics are rewarded, then immigrants would experience considerably lower unemployment rates than those of the Australia‐born. The unemployment rate differentials actually observed in the albour market arise because this potential advantage is offset by “unjustified” factors. This suggests a role for skill adaptation courses, competency based skill standards and a strengthening of affirmative action programmes for ethnic minorities.The study also shows that recent immigrants are at a pronounced unemployment rate disadvantage, and that this disadvantage persists for a considerable period. This result differs from recent findings for the US labour market where duration of residence effects are short‐lived. It is suggested that this difference may be associated with the Australian labour market being less flexible than the US labour market.