Why high levels of net migration present problems for unemployment and external debt stabilisation

2017-05-05T03:35:38Z (GMT) by Mitchell, William
Unemployment is affected by two factors: increases in the productivity of labour and increases in its supply. Both of these factors could, in principle, be offset by strong economic growth. But, if the economy grows fast enough to accommodate both productivity gains and the addition of migrants to the labour force, it will draw in more imports and the balance of trade will deteriorate. Economic growth of around two per cent per annum may be all that we can sustain without increasing our foreign debt. This level of economic growth is not enough to reduce unemployment in the face of any net immigration (or any growth in labour productivity). Copyright. Monash University and the author/s