The Education–Occupation (Mis)Match of Asia-Born Immigrants in Australia

Abstract

Skills shortages in the developed world are being addressed through selective immigration programs. Immigrant skills wastage signifies costly inefficiencies at both the micro and macro level. In addition to impacts on individual’s job satisfaction, work effort, and wellbeing, skills wastage reduces the intended productivity gain from highly skilled immigrants. This study examines the mismatch between immigrants’ education and the occupations they attain in Australia. Using a sample of 73,649 females and 120,602 males from the 2016 Australian census, we extend the Realized Matches method of measuring over-education, disaggregating over-education into “moderate over-education” and “severe over-education.” Multinomial logistic regression results show that the likelihood of severe over-education is considerably higher for Asian immigrants, and most of all the China-born, Indonesia-born, and India-born, than the Australia-born, and is also higher than for immigrants born in other countries, even after controlling for a range of other characteristics. Almost all overseas birthplace groups are also significantly more likely to be moderately over-educated than the Australia-born, especially those groups in which higher percentages gained permanent residence through skilled migration. The results highlight the heterogeneity of immigrant education–occupation mismatches and demonstrate that the real extent of immigrant over-education may have been disguised in previous studies by assuming that all incidences of over-education are equally consequential. In view of the considerable skills wastage indicated by the severe over-education of the Asia-born, the selection criteria by which skilled immigrants are admitted may need rethinking.