Thursday, 28 May 2015

Migration targets

Suppose that all of the following are true.

  1. Auckland land use policies restricting both densification and expansion on the fringes make Auckland house prices highly subject to migration pressure. If you run a vertical supply curve, any shift in demand translates into moves up and down that curve.
  2. Migrants will go to the place that best suits them; that will depend on things like having an established community from their home country and on their likely wages in the different places.
  3. Many rural regions would really really like to have more migrants; it's easier to fund existing infrastructure if population isn't declining.
  4. Migrants prefer to go to Auckland and so current immigration policy is hitting on 1; that will continue until housing costs are so high that migrants are indifferent between moving to Auckland and moving elsewhere. This means that productivity differences between Auckland and the regions are capitalised into house prices.
The Immigration Minister's contemplating adding more extra points for those migrants willing to live outside of Auckland. This puts less pressure on Auckland housing prices, but does mean that migrants are forced to go to places were they would be less productive than they otherwise could be - or where they're worse off as they view things for want of Auckland-specific amenities. 

Best would be to fix Auckland land use policy so that more people could live there. Without that, we're in second-best worlds where the alternative to "migrants have to go to not-Auckland" could well be "well, then, we won't let so many migrants in."

While we're in this second-best world, I wonder whether there could be option for Councils to say how many points they'd like to award for migrants willing to come to their regions. The "Not Auckland" space is pretty heterogenous.


  1. Re. #2- I doubt that many rural communities would be thrilled by having an ethnic diaspora of insular Mandarin/Arabic/Yiddish speakers transplanted within their midst. I don't know if you've spoken to any New Zealanders lately, but many people don't really appreciate the fact that you can walk down many a street in Auckland and not see a sign or hear a word spoken in English. Fine by me as long as they're high-achieving Asians, but I'm the exception.

  2. Enforcement would be a fairly major issue if the government was to go down this route (and was serious about it, not just wanting points for being seen to "do something")
    In addition, most arrivals these days first come on work visas, rather than blanket permanent residence approvals. Once someone is here, in a job, it might be even harder (and costlier, in various ways) to get them to move to the regions than someone applying direct from offshore. If there really are untapped econ opportunities in the regions, the work permit scheme already allows the immigration route to be tapped.
    Councils........and they have the right incentives. I'm not sure the Dunedin City Council is an encouraging example. The risk is that councils, in regions that probably should be declining (of which there have been many in the last 175 years), would waste more ratepayers' resources trying to somewhat artificially boost the local population.

  3. I wonder how much Auckland racism against new migrants is driven by housing supply issues rather than innate redneckery.

    And I'd love for you to point me to any NZ neighbourhood where there were a majority of Yiddish speakers.

    But note that the majority of migration to NZ rural communities wouldn't be from any of those groups but rather, as I understand things, Filipinos working in the dairy sector.

  4. Yup. I have no clue how they'd run enforcement. They must have some plan for it, since they're looking to award additional points for those willing to live outside Auckland.

    The work permit regime is still a big hassle for migrants and for employers. Where there are big enough migrant pools and enough employers needing workers, sure, the employers can send immigration agents out to those places soliciting applications. Not sure that does as much for others.

    Agree that declining regions would have stronger incentive to seek migrants; not sure why that would necessarily be a cost to them other than opportunity cost relative to where those migrants would instead be in more productive places AND where those places were able to supply more dwellings.

    Dunedin... so the worry is they'd set a migrant visa to build a football team good enough to draw a crowd to the stadium?

  5. Its surely about time that Auckland said housing was a more economic land use than market gardening and reacted accordingly.

    Unlike the more wealthy and productive UK Aucklanders would be able to import their spuds from only 120km away than 18,000km, and I'm sure Waikato spuds aren't that bad or spoiled from a further hour of travel.

    As for the regions its not really so much what we think about migrants as what they think about us.. and thats probably not much in terms of business, employment and same culture and ethnic support.


  6. Technical question for the economists: what do you mean when you say "productivity differences". This idea of high productivity cities comes up when places like San Francisco and housing prices are discussed.

    On raw numbers Auckland doesn't look particularly wealthier than many other parts of the country. At 31 March 2014 the GDP per capita in Auckland was $53,748 while for the rest of the country combined it was $50,075. Wellington, Southland and Taranaki outperformed Auckland on that measure while Christchurch and West Coast were on a par.

    I understand that demographics may differ and incomes may be distributed differently (every Maserati driver on Ponsonby Rd being balanced by 50 kids on zero hours contracts somewhere). Is there any more to regional productivity than just saying all the good jobs are in Auckland?

  7. Here's the best place to start on it:

  8. And yet Ganesh Nana was on radio worrying about losing productive farmland.