Migration or Stagnation

Michael Clemens shows that a rise in noncitizen worker prevalence in Korea from 3% to about 14% over four decades would offset the effect of Korea's demographic shift. 

The Republic of Korea (ROK) faces an economic crisis driven by rapid population aging, approaching negative economic growth. I quantitatively examine the full range of policy responses and find that enhanced temporary labor migration is necessary, sufficient, and feasible to offset demographic drag. It is necessary because no other policy channel (including capital accumulation, artificial intelligence adoption, elderwork, education, or pronatalism) has the clear quantitative potential to meaningfully offset aging in the best available forecasts. It is sufficient because a rise in noncitizen worker prevalence from 3% to about 14% over 4 decades would offset most of the demographic drag on economic growth in the ROK. And it is feasible because this trajectory resembles that already experienced by Malaysia and Australia. Many advanced economies will follow in the ROK’s demographic footsteps and have much to learn from its decisions.

I'd run some rough figures earlier in the year. If NZ maintained net migration of around 1.8 young net migrants for every person turning 65, you could maintain the current under-65 to over-65 ratio. The absolute number of migrants would have to go up as resident migrants age. If other ways of changing NZ Superannuation are ruled out, this would be an alternative.

Disappointing - Updated

The ACT Party has announced a new policy that would:

• Remove the existing Permanent Resident visa category;
• Require all Resident Visa holders to receive a 5 year travel facility, replacing the current two-year initial travel condition;
• Require all Resident Visa holders to be physically present in New Zealand for at least 730 days within any rolling five-year period, with exemptions for those working overseas for NZ employers, accompanying family-members, military personnel serving overseas, those with a citizen-spouse, or other compelling humanitarian reasons.

I have questions. 

• Are existing Permanent Residents to be grandparented to that status, with the category only closed to new entry? Or do we all lose Permanent Residence?
• If existing Permanent Residents lose that status, are we punted into the resident category or does something else happen?
• Many countries forbid dual citizenship, or make dual citizenship really hard. Some will withdraw your existing citizenship if you take up citizenship in a second country. Anyone who is a citizen of one of those countries and is resident in NZ would be forbidden from splitting time between the two countries without taking up NZ citizenship, which would mean the loss of that other citizenship. Would this count as a humanitarian reason for an exemption? How much red tape will be involved in getting that kind of exemption? What would be the associated regulatory burden both on those required to jump through the new hurdles, and those required to process the paperwork?
• The Active Investor Plus visa provides a path to residence in which those investing at least $5 million can be eligible for residence with 21 days' presence over three years, or by investing $10 million and spending 105 days here over five years. Investors in that pathway, who will have invested millions of dollars, are promised that they can obtain Permanent Residence after meeting those requirements. They are not listed as an exemption. And you have promised to abolish the category that formed the basis for their investments. Many of them will be managing investments across multiple countries, and New Zealand's general not being giant jerks to migrants pitch has been part of the deal. Will you provide them with a grandparented right to the Permanent Resident visa category? If not, will you compensate them for any losses if they liquidate NZ investments where you've broken the deal? 
• To what actual problem is your proposed policy the most cost-effective solution, and do you really think the benefits exceed the cost? There are going to be a whole pile of unintended consequences if you go ahead with this. 

Update:

An ACT Party spokesperson has provided a few additional details. What they have in mind is not as bad as the worst-version.

The policy is not retrospective, so existing Permanent Resident Visa holders would not be affected.  Nobody who already holds a Permanent Resident Visa would be moved onto another visa, required to reapply, or subjected to the new 730-day requirement. ...

The Active Investor Plus Visa is exempt, so the existing arrangements for those investors, and future ones in the same category, would remain.

I still really do not like any of this. But at least it is not retrospective. And at least those coming through the Active Investor Plus category will not be affected. I don't know whether they'd achieve that by voiding the days-test for residents who came through that pathway, or by closing the PR pathway to everyone but those coming through specific channels. 

Conditional on there having been some decision to create a wider differential between residence and citizenship, I think it would have been better to also maintain a PR channel for residents whose passport-country forbids or makes dual-citizenship onerous. 

Refugee sponsorship

About a decade ago, Canada's Counsellor for Immigration at the High Commission in Canberra came to Wellington to explain how Canada's refugee sponsorship programme works. 

His discussion of it at The Initiative's event is here. 

The basic deal: whenever communities can get together to raise the funds necessary to support a refugee's start, Canada will open the door to another refugee. Outcomes have been very good - or, at least, sponsored refugees have better outcomes than those arriving through the government's quota.

The previous Labour government here set up a trial programme. And it's now being made permanent. 

The Government has announced the Community Organisation Refugee Sponsorship (CORS) programme will become a permanent part of New Zealand’s refugee resettlement system.

Associate Minister of Immigration, Casey Costello said the trial of the CORS programme shows it can deliver strong outcomes for refugees in employment, housing, education, and community connection.

“Making it permanent means we can build on the skills, partnerships and knowledge developed through the pilot. This is a positive step and provides a programme that we know works,” Ms Costello says.

The permanent CORS programme will begin 1 July, with organisations able to apply to become approved community sponsors from that date. The introduction of the programme will be scaled, with 50 places available in the first year.

But there are a couple of substantial differences as compared to Canada's regime. Hopefully New Zealand's can evolve towards Canada's in time.

Canada has a high nominal cap on the number of allowed sponsored refugees. 

New Zealand will cap the number at 200.  

Canada's sponsored route sits on top of the government's route. However many refugees the Canadian government is prepared to support, communities can fundraise to support more. Those sponsored refugees are additional. 

New Zealand's will be subtractive. The total number is capped, so whenever a community gets together to sponsor a refugee, one will come through that channel - with no effect on the numbers allowed to come here. 

CORS will be delivered alongside New Zealand’s Refugee Quota Programme, maintaining an overall number of refugee resettlement places available at 1,500. Places will be progressively allocated to the community sponsorship pathway as it scales up, with the Quota Programme adjusting accordingly. This allows CORS to be funded from within existing baselines.

The Refugee Quota Programme will remain New Zealand’s primary humanitarian pathway, and any allocated CORS places that are not taken will return to the Quota Programme. 

“In the current environment, this is the best way to ensure a programme that we know works well can continue into the future,” Ms Costello says.

“The Government remains firmly committed to an overall resettlement intake of 1,500 people per year. New Zealand currently takes the third largest number of UNHCR mandated refugees internationally, behind Canada and Australia.” 

If the concern is resourcing, because the government covers some of the cost in a refugee's travel here, it could make more sense to increase the amount of funding that a community group must raise so it covers the total cost, and then allow it to be additional to the government's quota. 

During the Syrian refugee crisis, Canadian communities could work together to help support more arrivals while Kiwis instead had to lobby the government to increase the quota. I'd hoped that the sponsorship regime could provide flexibility that the government's quota can't. It will not do that job under this setup.  

Good doormen and good bouncers

I'm not convinced that there's a real problem to be addressed by ACT's immigration policy. 

I also don't see it doing much real harm. And I can see how it could do a lot of good for public perceptions around immigration. And those perceptions, held only by a very small minority as of the 2023 survey data (2025's will be released later this year) could turn into a real problem. 

ACT wants to make it easier to deport residents. The government is already shifting policy so that someone who has been resident here could be deported for crimes committed within 20 years of being granted residence. I miss that window by a couple years. ACT suggests removing the time limit entirely. 

So if I don't bother going for citizenship in the interim, and I get convicted (innocent people do get convicted from time to time) when I'm 70 years old, and have basically no remaining connection to Canada, and wouldn't be eligible for pension there either for lack of residence over the prior half-century, I could be sent off to the arctic. Very nice. 

They've also proposed a stand-down period for access to benefits - fair enough. Even Clinton had that in his 1996 welfare reforms. ACT ought to consider other parts of that policy, including the term limit on lifetime access to the equivalent of Job-Seeker Work-Ready benefits. 

And they've suggested greater enforcement against overstayers. People who overstay their visas but don't cause any other trouble aren't a priority for Immigration New Zealand - for pretty obvious reasons. Increasing enforcement would mean diverting resource from other activities, or staffing up. They're going to require platforms like Uber to do more checking that driver-partners have valid visas; hopefully the regulatory burden won't be substantial. I don't think there's any real problem here - overstayers will have particular incentive to not do crimes because drawing attention would mean quick deportation. But also fair enough where perceptions of system integrity matter. 

I worry more about what ACT's policy is responding to. A pile of people on the right have been encouraged to believe that the immigration problems evident in Europe and the UK will soon manifest in NZ - or that they already have. ACT hasn't encouraged this false belief. Some others have. 

Viewed as a suite of measures designed to help everyone have confidence that bad people would be kicked out quickly, so that NZ can maintain the kinds of high levels of support for migration seen in MBIE's surveys over the past decade, it's good. 

But a bit depressing that it may be necessary.

My column in Monday's post (ungated here) covered it. The online version of the article has links to the surveys etc that I used as source. 

I used a bar analogy. A bar ought to have at least one of a good doorman or a good bouncer. Unwillingness to have either could be risky. NZ has a decent doorman and a pretty good bouncer. Strengthening both won't do much harm, and could let the bar accommodate more patrons.

Thank a migrant

Combine a points-based migration system that welcomes higher-earning younger people with progressive tax systems and you get a result like this, from Tim Hughes at Treasury:

The central finding of this paper is the simplest. In aggregate, the foreign-born are becoming increasingly important for the country’s tax base. Foreign-born people made up 24% of the population in 2000, also paying 24% of individual tax on market income. Since then, the foreign-born’s share of the population has grown, and their share of tax paid has grown even faster. In the tax year ending March 2024, the foreign-born made up 32% of the population, and paid 38% of the tax.

As Lewis Holden put it on Twitter: 'Goddam immigrants coming to our country, paying all OUR taxes'.

Rebuilding one bit of state capacity

New Zealand's immigration bureaucracy isn't in the best of shape. 

So it's interesting to read this piece from the Niskanen Center on Biden's refugee resettlement programme, and how it provides an example of rebuilding state capacity. 

President Biden set ambitious refugee resettlement goals—62,500 for 2021 and 125,000 for 2022. However, the U.S. lacked the capacity to meet these targets. The resettlement system, significantly weakened by previous cuts, struggled to reach even 10% of the target. While the policy was clear, the necessary infrastructure was woefully inadequate. There was little state capacity. 

The challenge was clear: How could the U.S. government, along with its global partners and local resettlement agencies, restore a refugee system that had once been a global leader but had since deteriorated? The task required swift action to rebuild the infrastructure, resources, and capacity needed to meet the ambitious resettlement targets set by the administration. It was a race against time to revive a program that, only a few years earlier, had been a cornerstone of U.S. humanitarian efforts.

To understand how the U.S. refugee program rebounded, it’s essential to first look at how it was dismantled. Donald Trump campaigned on the notion that the program posed a security threat, particularly emphasizing risks from refugees from Muslim-majority countries due to what he claimed were inadequate vetting procedures. Shortly after taking office, he implemented a travel ban, paused refugee admissions for 120 days, and reduced the annual refugee admissions target. Each subsequent year, the admissions cap was lowered further, causing over 100 resettlement offices across the country to close.

When COVID-19 hit, the already weakened refugee system collapsed, reaching its lowest point in history. Refugees who had completed the rigorous security and medical checks saw their approvals expire as the program came to a standstill. By the time Joe Biden took office, the resettlement pipeline had been hollowed out. It wasn’t just a matter of restarting the program — it was about rebuilding U.S. state capacity for refugee protection from the ground up. This was far from a simple flip-the-switch scenario; restoring functionality required a comprehensive overhaul. 

Niskanen’s Jen Pahlka identifies three essential strategies for increasing state capacity: 1) recruiting the right people, 2) focusing them on the right things, and 3) reducing unnecessary burdens on their work. This straightforward framework delivers dramatic results and offers a clear lens to understand how the U.S. refugee program was successfully rebuilt.

Probably worth writing up as a proper column sometime.  

Afternoon roundup

A closing of some of the tabs

First, a set from closing a pile of the week's accumulated stories from the Stuff papers. I wonder whether the people who complain about the absence of real journalism bother reading what The Post and Sunday Star Times have been putting out lately. 

• National's 'tax relief' won't be a tax cut "because the only real cut is a spending cut, anything else is just rearranging who pays what and in which generation."
• "If Health New Zealand can't find doctors, his iwi will." Some of the social services already being provided by Ngāti Toa.
• Andrea Vance asks "How did the cost of moving two schools blow out to more than $400m?"
• Promising work on methane vaccines for cows. Including great context from Dave Frame. [And here's Dave Frame and Adrian Macey over at Business Desk on methane]
• A path from John Birch through to anti-fluoride activism in NZ that runs through ZAP - a group I'd not heard of for at least a decade. Just great stuff from Charlie Mitchell here. 
• Poor response rates in the 2023 Census, and speculation that it might be the last census as we know censuses. 
• This one is just beautifully written. Joe Bennett on a walk up a hill.

  There’s a lot to be said for being a cattle beast. You live with friends. Your food is all about you. You own nothing but an ear tag. And castration frees you from the main source of worry and expense. Admittedly you make one bad journey in the end, but you don’t see it coming, and your mates go with you. And you’re spared the horrors of old age.

And the rest of the tabs. Or some of the rest. I'm drowning here but the computer needs to be rebooted.... 

• One hypothesis on why Google Search doesn't work as well as it once did.
• Another climate stress test, another finding of zero systemic risk justifying RBNZ's continued prudential excursions into climate issues. Unless prudential reg now is meant not to guard against systemic risk and instead starts from assuming that bank directors are idiots and that bank shareholders need to be protected against bad decisions.
• NZ's NPS-UD doesn't go hard enough. British Columbia's enabling apartments up to 20 stories near transit stations. 
• A new (to me anyway) metastudy on workforce diversity. Effects are significant and positive, "but insubstantial."
• "If the government believes making it more difficult to recruit offshore is going to get 50,000 people off the dole they are as deluded as all those who came before them who wanted to believe the same thing. I get the politics. I don't get the economics."
• RBNZ now investigating whether we should have a central bank digital currency.
• The Government really ought to push ahead with the Rule of Two for Medsafe Approvals. It would unlock access to RSV vaccines. Come on......
• Taiwan wants NZ to do more in supporting anti-authoritarianism. I wonder whether we ought to be doing more in supporting scholarships for promising students from the Islands to study in NZ.
• After my Insights column on the Christchurch Cathedral cost-benefit assessment, a reader pointed us to the business case for a major Tauranga city redevelopment project. I'd hope that, if central government is putting money into this, it pushed hard on checking whether the increases in tourism are plausible (and net national rather than within-country diversion). And whatever arguments one wants to have about appropriate discount rates for social projects as compared to infrastructure projects, expect infrastructure spending (like museums) to be portrayed as social investment where the lower discount rate allows a higher NPV for purported benefits. Bit of a Lil Lisa's Slurry problem here. 
  
  
  

Afternoon roundup

The afternoon's worthies:

• Immigration restrictions on spousal work rights are dangerous.
• 28 months jail for tobacco smuggling
• Pseudoephedrine is legal. Now we just have to wait for pharmacies to stock it.
• Really neat stuff on NZ board directors. 
• When Wisconsin school districts got to decide how to pay their teachers, shifting to flexible pay "raised salaries of high-quality teachers, increased teacher quality (due to the arrival of high-quality teachers from other districts and increased effort), and improved student achievement." HT: John Dickson.
• RBNZ's estimates of the neutral interest rate
• Rocket Lab's increasing success in landing US DoD contracts. 
• Ikea is spending just over $400 million to open its NZ shop.

Afternoon roundup

The closing of the tabs...

• When I tweet my columns, probably best to thread them with the link to the column coming late in the thread, and maybe a screenshot of part of the column in the lead tweet. Twitter's downweighting tweets with links. 
• Meta pulls back from news in Europe. There was so much wishful thinking among the bien pensant about the ability to extort platforms to pay for news. I think NZ media still believe it. It won't end well. 
• Is there a betting market on the John Bates Clark? I'd be putting some money on Seamus's former student David Baqaee. 
• Immigrant entrepreneurship in Canada and location choice. Canada's just so well-placed to take advantage of American xenophobia.
• New York bans AirBnB. NZ's hoteliers would very much like to pull this kind of trick too. 
• Man but Works in Progress are putting out great stuff. Judge Glock (that's just his name, he's not a judge) on local government anti-growth incentives in the US. And Sarygulov & Arslanagic-Wakefield on understanding the Baby Boom (hint: housing costs matter). 
• Great long essays from Scott Wilson on NZ Land Transport Policy. Part 1 on the history. Part 2 on what's wrong with the current system. Part 3 on fixing the mess. I had a podcast chat about some of this with Scott, in context of the Government Policy Statement, late last week. 

Morning roundup

The morning's worthies:

• NZ alcohol policy basically gives a veto over licensing to the Medical Officer of Health and to the Police. Sucks when you get a prohibitionist in charge of either. And why are so many NZ prohibitionists named Palmer anyway?
• Josh Gans on copyright status of AI-created works. 
• Grimes set up an AI trained on her own work. It tweets. Grimes notes, "The degree to which this bot has mastered my internal monologue is terrifying to me"
• Michael Reddell on RBNZ forecasting. I think it's a damned shame we didn't get NGDP markets for NZ; Simon Bridges murdering iPredict may have cost us considerably. Thanks again Simon. 
• A reminder that it was Don Lavoie who coined the term "knowledge problem" for Hayek's fundamental insight, not Hayek himself. Even if you think you're familiar with the term, please read this. 
• Immigration NZ continues to be an absolute mess. It's only partially the bureaucracy's fault. They'll have had whipsawing policy directives from the Ministers. First it's clamp down and don't process visas because Labour hates immigrants. Then the inevitable bad consequences from blocking migration, so they get told to stick every employer into the high-trust accredited employer visa programme to speed up processing - which pushes actually trustworthy employers into the same queue with a bunch that really really aren't. And the inevitable consequence of that. Absolute mess. Herald, Stuff. The Stuff piece is particularly good. 
• RBNZ figures that migration might now be reducing inflationary pressure rather than adding to it - easing labour supply bottlenecks.
• In today's edition of "China is actually a more stable and reliable trade partner than the US," Trump promises 10% across-the-board tariffs if elected. Shouldn't US foreign policy aim at encouraging deeper trade links with the US and reduced reliance on China?
• Action on Smoking and Health is getting fed up with BS coming from Health Coalition Aotearoa.

Afternoon roundup

The tabs do pile up. A few days out at the NZAE meetings, a couple days leave, and then digging out from under the pile...

• If the government forbids asylum seekers to work, it ought to be providing them income support. Instead it bans them from working and requires them to live off of any savings they might have, and charity. It really is a kind of administrative evil. 
• Anton Howes with some fun history of freight infrastructure
• Paul Walker with some fun history of the firm
• “You’ve got this cool thing that will get you the youth market and make you look innovative. But if there’s even the tiniest chance it will lead to a big fraud investigation or AML problems, you have really stuffed up. And you can never prove something 100 percent won’t go wrong.”
• Christchurch is pretending that its sun is different from the sun elsewhere as an end-run around MDRS rules. It'll be a test of how government responds to these kinds of shenanigans. 
• Industrial and process heat is covered by the ETS. Nevertheless, central government requires councils to consider climate change when consenting industrial process heat. An ETS means councils shouldn't have to think about this. 
• National has proposed a third medical school. But it won't do a lot of good without expanding the number of supervised practice positions at hospitals. Right now, there are international doctors who could practice here, in a desperate doctor shortage, but there aren't enough of those slots, and those slots are mandatory. Some catch, that catch-22.
• There has now been an increase in clinical practice positions so that we can get more nurses. Three years into the pandemic, but better late than never. 
• The great thing about carbon prices is that people really don't have to understand what actions are associated with reducing global warming. Prices give them all the guidance they need. Good thing, because a survey of Kiwis had 'rallying behind recycling' as doing the most good for the climate. Recycling has negligible effects on GHG. But it doesn't matter, because waste is in the covered sector... 
• StatsNZ isn't likely to hit census response rate targets.
• "Since when are monopolies for private companies a good thing?" Well, they can be. But they're less likely to be when granted by statute, as they are here...
• The pharmacy guild advances implausible arguments for maintaining guild restrictions on pharmacy ownership. 
• Me, in Newsroom, with a reminder about Alchian's shipping the good apples out. 
• Police response-time targets have been curved...
• Willie Jackson wants to have a big nationalistic fight with Big Bad International Platforms to take to the election. Only sensible way of reading this. 
• Tech to reduce nitrogen runoff from fertilizer. Neat. 

Tyler's warning for New Zealand

A warning from Tyler Cowen (Bloomberg, republished by BusinessDesk): higher income countries are going to need to attract more migrants. But there's a problem:

If you were thinking of leaving your country, would you rather go to a wealthy country with higher tax rates, or one with lower tax rates? Especially if the country with higher taxes has a long tradition of not welcoming migrants, and you would be less likely to find any expatriates there? Besides which, due to their ageing population, those countries may simply be boring, at least for young people.

The danger is that countries with more restrictionist immigration policies will get locked into low-migration outcomes for the foreseeable future, whether they like it or not. It’s hard to say when this point of no return might be reached – but it is another argument for taking in more migrants today. And accepting more migrants today is an investment in accepting more a generation from now, which is when countries will really need them.  

Risk for New Zealand 

Take the example of Canada or Australia, two countries that have had relatively open immigration policies. Twenty years from now, when wealthy countries may be competing more for new migrants, Canada and Australia will be in an especially strong position to attract the most productive foreigners. 

The risk of being locked out of competition for migrants may be even greater for smaller countries such as Denmark or New Zealand. 

 

Evening roundup

The accumulated worthies:

• Dave Heatley on the publicly-provided goods that should, and should not, draw user charges - and how to tell the difference. Public transport should be charged. I'd add that, when congestion charging is finally in place, the case for subsidising public transit really goes away. Or at least the economic case for it. 
• If you think that NZ hosting FIFA matches is worth at least $11 per capita in fun and festivities, then that's fine. But there might be better uses of the money. And if you think the spending buys us anything other than a festival, you're deluding yourself. A few bits from me in this piece. 
• New Zealand's holiday pay rules are so complicated that the Ministry of Health has spent $50 million on consultants trying to deal with it. They now estimate that they owe backpay of $1.8 billion due to incorrect holiday pay calculations. 
• Otago's public health people prefer prohibitionist approaches to vaping, with restrictions ramping up as smoking rates decline. 
• Westpac argues for vertical separation of the supermarkets to encourage competition. Their report ignores regulatory restrictions against new large-scale entry, other than nodding at removal of covenants. Bizarre from a sector that's likely to be hitting its own market study soon, and ought to prefer that interventions have sound logic. 
• New Zealand has a new policy in the event that boatloads of refugees arrive: detention. UNHCR has some reasonable concerns. 
• Concentration in graduate economics education.
• Scott Sumner on Noah Smith's pessimistic vision.
• Water flows downhill and restrictions on housing supply drive housing price growth. Nathaniel Baum-Snow in the Journal of Economic Perspectives. 
• Want affordable housing? Make sure there's ample excess zoned capacity. 
• Council-owned wastewater treatment plans are often a mess. Regional councils seem to feel constrained against properly enforcing their regulatory duties. 
• An oldie but a goodie: Alex Tabarrok on The Happy Meal Fallacy
• Some cautions about the "Gas stoves cause asthma" hypothesis. A lot of the underlying research isn't that sound. 
• Remember how SCTV came up with Bob & Doug McKenzie in response to a demand for 2 minutes more Canadian-content per episode? Think about that when considering CanCon rules for pornography in Canada....
• The Spinoff has a pre-budget roundup. Six months ago I'd have put very high odds on some form of a carbon dividend showing up. Now, with some problems in the last auction, it's harder to say. Still some odds of it though. A few bits from me in this piece. 
• Peter Griffin on Rocket Lab's successes. This really was one where NZ's regulators stepped up to quickly set an enabling regulatory framework. 

Afternoon roundup

The clearing of the browser tabs...

• NZ Govt plans to follow Oz in using detention camps if we ever have arrivals of asylum-seekers by boat. It's funny because Labour liked to portray themselves as kinder than Trump. Pretty terrible otherwise. 


• Govt contracts out management of the TAB monopoly on sports betting to the British company that runs Ladbrokes. Would really prefer disestablishing the monopoly. 


• “I don’t believe climate change is the greatest threat this sector has to address. I think energy security and keeping the lights on is.” Genesis Energy's CE Malcolm Johns is absolutely correct. NZ's power system is already highly reliant on renewables. Energy News ($)


• Scott Sumner's new monetary econ text
• Astral Codex Ten's excellent Turing Test. Incredible fun.

Chatting immigration

I'd yesterday talked immigration with the Herald's Damien Venuto for their Front Page podcast series.

You can catch the story here. 

 

I mentioned or alluded to a few papers. You can find them here. 

• Grabowski, D, J Gruber & B McGarry. 2023. Immigration, the Long-Term Care Workforce, and Elder Outcomes in the U.S. NBER Working Paper 30960.
• Fabling, R, D Mare, and P Stevens. 2022. Migration and firm-level productivity. Productivity Commission.
• Stillman, S and D Mare. 2009. The Impact of Immigration on the labour Market Outcomes of New Zealanders. Motu. 
• Peri, G. 2014. Do immigrant workers depress the wages of native workers? IZA. 

Afternoon roundup

The worthies from the tabs:

• Kate MacNamara tracks down all the Covid funds that wound up diverted into the road use subsidy. $1.3b and counting. 


• A reminder that it can be easiest to innovate by leaving academia. 


• Messy claims that the UK sugar tax reduced obesity. Looks like green jellybeans. 


• People keep telling me cancel culture isn't real. And yet I keep seeing stories like this.


• Great to see that the sponsored refugee regime has been working out. Genuine good news. Let's hope it expands. 


• Treasury's hiring a Director, Economic Systems, meant to have a significant leadership role in macro and growth. Nothing in the job requires an economics degree. I hope that properly qualified economists do apply, and that good applications drive out bad. 


• Men on Tinder are not intimidated by highly educated women. 


• Markups and inflation. How markups move can tell you whether you're dealing with a supply-side or demand-side issue. Price Theory is great. 


• Bill English's 2005 Chapman Lecture. Some issues are timeless. 
• Helen Dale on the Return of the Pagans.


• Tap Yellowstone for basically limitless power. But it would cost on the order of $3.5 trillion to build. Not huge when compared to overall annual energy spend in the US, depending on marginal cost of running the thing and whether it could generate low-cost hydrogen for vehicle fleets. But it is a very big number.


• I would love to know how much Council time and effort went into this mess. A developer wanted to turn a ruin of a former dairy into housing. Council didn't want her to. They eventually relented and let her build, on condition that the houses have wooden window frames. What incredible value Council added here. Kudos. They should all be very proud. Especially the resource consent team leader who argued that the developer should have first tried putting up a fish and chip shop or a laundromat. 

Underemployment and immigration

Alexandra Turcu over at the Asymmetric Information substack goes through some of the underemployment figures. 

The answer matters. One story I'm regularly given about why Labour wants to maintain very tight immigration settings is that Labour ministers believe there is still a lot of slack in the labour force, despite inflation and despite the positive output gap, because of the seemingly high underemployment figures. 

Turcu finds:

We analysed data from New Zealand's Household Labour Force Survey (HLFS) spanning the six years between Q2 of 2016 to Q2 of 2021, finding that under-employed workers were only working one hour per week less than their fully-utilised counterparts. For those working full-time, this equates to 40 hours worked by the underemployed compared to 41 hours worked by the fully-utilised.

The key difference between the underemployed and the fully-utilised is not hours worked; rather it seems to be household and individual income. As an example, part-time underemployed workers earn 28% less than their fully-utilised counterparts, and this gap widens to 32% when we compare the full-time underemployed to to fully-utilised full-time.3

These findings challenge the tempting assumption that underemployed workers are just not working enough. It also begs the question: Is the issue that underemployed individuals aren’t working enough hours, or that they can’t increase their incomes while working a 40-hour week? We cannot determine this from the HLFS, as a “not enough income” option was not offered to respondents.

If you click through to the full paper, you find that there are about as many underemployed full-time workers as there are underemployed part-time workers and that the average underemployed worker puts in about one fewer hour per week than the average fully-employed worker - whether full-time or part-time. So a part-time worker who says they're underemployed works about an hour less than a part-time worker who says they're fully utilised. 

If Minister Wood thinks that there are a pile of underemployed workers who could put in a lot more hours if it weren't for those dirty dirty immigrants, well, there ain't much slack there. The paper suggests that a lot of reported underemployment is dissatisfaction about current income rather than hours.

Morning roundup

Another 'everything is stupid and broken' compilation from the closing of the browser tabs.

• Pharmac's comms team lied, repeatedly, to Today FM about an upcoming announcement. Then when Today FM reported on the very strong rumours it had heard, Pharmac's CE, perhaps mistakenly believing that TodayFM had had an embargo copy and had broken an embargo, announced they were blacklisted from any future interviews. Pharmac had set up a cozy feel-good exclusive for Patrick Gower so he could gush about the announcement. The drug is incredibly expensive per quality-adjusted life-year that it provides. Nobody has said anything about whether Pharmac has negotiated a good price, or whether cost-effectiveness has stopped being primary at Pharmac. If it's the latter, then Pharmac could have done more to help people by putting its limited budget to other uses. But Gower apparently teared up about how great it all is so all must be fine. Those providing 'fawning coverage' will get the exclusives. Others won't. 


• Our Prime Minister describes what was, odds-on, a deliberate attempt to entrench policy while under urgency and in very severe violation of constitutional norms - and criticised as unconstitutional and undemocratic by the country's main constitutional law experts - as 'quirky'. Quirky. Right. 


• Hiringa Energy tries setting up a windfarm and hydrogen plant, which would initially produce urea fertiliser. Greenpeace ties it up in the courts for years because it doesn't like urea. There are ample other suppliers of urea who would provide it if Hiringa didn't. Making sure freshwater management is set properly and that emissions from fertiliser on-paddock are correctly accounted really matters, but you sure as heck don't fix any of that by blocking one potential plant. The point was probably to excite Greenpeace donors about their fight against Big Fertiliser. A better court system would make Greenpeace face the full cost that it has imposed on others. We do not have a better court system.


• Wellington Hospital's emergency department is falling apart at the seams. 


• We're in a desperate labour shortage. The Immigration Minister still wants to make it harder for the spouses of migrants on work visas to take up employment. This kind of crap has been one reason some medical professionals have been leaving NZ - it's just too hostile to the rest of their families. 


• TVNZ's Jack Tame interviews the Broadcasting Minister. It becomes very clear that the Broadcasting Minister thinks Tame should be toeing a company line on policy. He goes on to criticise Tame's "negative interviewing" style. Thomas Coughlan is good on this episode. In that same interview, Jackson says Meta and Google have three to six months to cough up enough money for NZ media companies or he'll act. This is the behaviour you would expect of a Minister of a half-way respectable country, or of an extortionate mafia thug?

Afternoon roundup

The worthies, as I try to stop Chrome from crashing and crashing and crashing...

• The 9th Edition of Cato's Handbook for Policymakers is up. The things that can happen in bigger countries with much larger thinktanks...
• Simply amazing. A Korean provincial government backed the bonds for building Legoland Korea. Then an incoming provincial government wanted to change the terms. And the entire Korean bond market exploded. Remember kids: using the government's balance sheet to back bonds and bring down interest costs doesn't reduce the real cost. It just shifts risk onto the government's books. And sometimes that all goes ridiculously badly. 
• Some parts of NZ policy are frustrating because obvious ways of fixing things are ignored. Other parts are frustrating because they seem to be unfixable. Consider the current messes in immigration policy. 
• The folk economics of housing is folked up. "As Larry Summer said, "There are idiots. Look around.""
• It is illegal to access the updated vaccines in New Zealand and the government is ignoring advice around masks. 
• One potential conclusion from the latest from Arthur Grimes: allow unlimited inbound migration of happy people.
• Environmentalists oppose NZ biofuel mandates. Biofuel mandates never make sense, but they especially don't make sense when the sector's covered by an ETS with a binding cap. 
• Piles of detail on fights over consenting on the Waiau River.
• Government just doesn't seem all that good at managing pay structures. Also, if the government wants more nurses, requiring unpaid hospital placements like this as part of the training for new nurses might not be helping. 
• Matt Levine's rollercoaster ride through FTX.

Morning Roundup

The tabs...

• Australia considering changes in governance at the Reserve Bank, including setting a Monetary Policy Committee. Hope that they avoid the errors NZ made around unqualified Board members and ruling out monetary policy expertise on the Monetary Policy Committee.
• Regulations shifting toward open banking are coming. It seems in-principle a good idea.
• Vic Uni's Martien Lubberink with some cautions about attempts to tax bank profits.
• The government's delaying biofuel mandates. That's great, but better would be abolishing them. When tech and carbon prices make them a cost-effective way of mitigating emissions, fuel companies will pick them up to avoid paying for carbon permits. National says it would scrap any mandate - good!
• Jem Traylen at BusinessDesk points to a path through on Three Waters; includes a bit from me on revenue bonds. 
• Canada playing silly buggers with tariff-rate quotas under CPTPP to freeze out NZ dairy. It's going to arbitration. 
• Oliver Hartwich on collapsing education results. 
• Michael Reddell on RBNZ Governor appointments. Bottom line: better to find a Governor that has respect from all the main parties rather than either a short-term extension or reappointing the one who hasn't got it. 
• Geoff Mortlock on Orr's reappointment.
• Immigration NZ's computer systems remain a mess so the backlog in visa approvals gets worse. If that can't be fixed in a hurry, why not just ditch the rule banning non-residents from buying houses so that living here as a non-resident is less bad?