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Weinhold, Nicolas
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New Zealand Trade Consortium Working Paper 44
The New Zealand economy faces the possibility of growth constraints because of its small domestic market, reliance on biologically constrained industries, and large distances from potential trading partners. Migration can be a strategy to partially overcome these constraints by strengthening links with other economies and profiting from skills that are not readily available from the domestic labour market. Migration, as a potential source of economic growth, has been aided by advances in technology and international trade policy, reducing the transaction costs that distance and other factors imposes on trade. The reduction in transaction costs offers opportunities for trade and migration that have not been feasible in the past. Our focus is on migration, particularly temporary migration. The literature points to a substantial positive impact on the flows of capital, human capital, and goods and services, which could boost economic growth. However, concerns about the negative effects (e.g. increased competition for jobs and cultural conflict) need to be addressed by an appropriate immigration policy, which ensures that migrants’ skills complement the domestic labour force. Moreover, social cohesion is largely dependent on economic outcomes and successful integration mechanisms. In the market for university professors, internationalisation has taken place. Employees that hold foreign qualifications make up about 40 per cent of the market. We identify the prerequisites for such an integrated market, as well as the non-transferable characteristics which are associated with the internationalisation of that labour market. We conclude that the academic labour market is a special case (corner solution), exhibiting a large degree of mobility with high rates of foreign labour and temporary migration. Despite its unusual characteristics, it can be used as a benchmark to: [1] Foreshadow the degree international labour markets will change as the result of continued globalisation; and [2] Act as a pointer for policy making. This includes policy aimed at facilitating temporary migration and ensuring easier comparability of qualifications.
Document Type: 
Working Paper

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