doi:10.1016/j.econedurev.2006.02.005 
Copyright © 2006 Elsevier Ltd All rights reserved.
Immigrant overeducation: Evidence from recent arrivals to Australia
Colin Greena, b, Parvinder Klerc, 
, 
and Gareth Leevesc
aCentre for Economic Policy Modelling, School of Economics, University of Queensland, St. Lucia, Qld. 4072, Australia
bCentre for e-Science and Department of Economics, Lancaster University, C Floor, Bowland Annexe, Lancaster LA1 4YT, UK
cSchool of Economics, University of Queensland, St. Lucia, Qld. 4072, Australia
Received 8 June 2005;
accepted 3 February 2006.
Available online 30 May 2006.
References and further reading may be available for this article. To view references and further reading you must
purchase this article.
Abstract
Australian immigration policy, in common with the US and Canada, has increased the emphasis on skill-based selection criteria. A key premise of this policy is that skilled immigrants are more employable and can add to the productive capacity of the economy. However, this effect will be diminished if immigrants are working in occupations that fail to utilise their skills. We examine the extent of overeducation for recently arrived immigrants to Australia. We find that they are more likely to be overeducated than the native population, even if they enter on skill assessed visas. Overeducation is greater for immigrants from non-English speaking backgrounds (NESB) and generates lower returns to education. Tighter restrictions to welfare support on entry raised employment levels but increased overeducation. This will serve to reduce the potential productivity gains from skill biased immigration policies.
Keywords: Human capital; Rate of return; Overeducation
JEL classification codes: J24; J61
Table 1.
Qualification and occupation structure—employed males, age 15–64a
a Source: LSIA, 1996 and 2001 Census.
Table 2.
Incidences of overeducation and average wages and salaries (1994 Australian dollars)—males age 15–64a
a Source: LSIA, 1996 and 2001 Census.
Table 3.
Bivariate probit estimates—determinants of employment and overeducation of male immigrants aged 15–64a
* 1% level of significance. ** 5% level of significance. *** 10% level of significance. Standard errors in parentheses. Omitted categories are Cohort 1, working full-time, Qualifications not assessed, Married, Visited Australia prior to immigrating, Had funds on arrival, Have access to a private motor vehicle, Not employed in FC, Primary language—English and Visa—ENS. For regional dummies, coming from the UK and Ireland, South East Asia, and from North Africa or the Middle East are the omitted cases for ESB, Asian NESB and Other NESB immigrants, respectively.
a Source: LSIA.
Table 4.
Male log weekly wage earnings, aged 15–64a
* 1% level of significance. ** 5% level of significance. *** 10% level of significance. Standard errors in parentheses. Omitted categories: Cohort 1, working full-time, Qualifications not assessed, Married, Visited Australia Prior to Immigrating, Had funds on arrival, Access to a private motor vehicle, Not employed in FC, Primary language—English and ENS Visa. Sub-regional dummies are as in Table 3. A set of state dummies is included but not reported.
a Source: LSIA.
Table 5.
Returns to required and surplus schooling by cohort—male immigrants, aged 15–64a
* 1% level of significance. ** 5% level of significance. *** 10% level of significance. Standard errors in parentheses. All variables in Table 5 except Cohort 2 were included in the regressions. Results available upon request.
a Source: LSIA, 1996 and 2001 Census.
Table A1.
Variable definitions
Abstract
Purchase PDF (201 K)
E-mail Article
Add to my Quick Links
Cited By in Scopus (2)
Purchase PDF (193 K)
