Immigration and ‘Brain Waste’

Abstract

We analyse ‘brain waste’, or underutilisation of immigrant skills in the New Zealand labour market, with specific reference to immigrants from APEC member countries. Using census data, we find wide variation across APEC countries in the likelihood that a typical immigrant from these countries with a tertiary qualification works in a skilled occupation, consistent with brain waste. Our exploration of the drivers of brain waste reveals that GDP per capita of the country of origin of immigrants, its distance from New Zealand, expenditure on education and colonial links to New Zealand are negatively related to brain waste. After accounting for these drivers, there is no evidence that brain waste is mitigated among immigrants from APEC member countries. Our study highlights the need for efforts to facilitate utilisation of immigrant skills in the region, such as cooperation among APEC members in standardising certification requirements and dissemination of information on skills demand and supply and the nature and quality of the education system.