Wage arbitrage through skilled emigration: Evidence from the Pacific Islands

Abstract

Skilled workers in poor countries earn wages a fraction of that of their counterparts in rich nations. Here, we estimate the opportunities for wage arbitrage from emigration of workers from the Pacific Islands into Australia and New Zealand. Our calculations, based on wages earned by graduate accountants, computer science graduates and cooks with Certificate III qualifications, reveal wage premiums of a factor of up to 10 from emigration. Likewise, the cost of training to Australian standards within the Pacific Islands is as little as a third of that in Australia meaning that the total factor of economic arbitrage is 30.

Labour Mobility With Vocational Skill: Australian Demand and Pacific Supply

“…Current initiatives such as the ‘long‐term’ stream of the Pacific Australia Labour Mobility (PALM) scheme and the Australia‐Pacific Training Coalition, while precisely the seed of such pathways that is needed, remain limited in magnitude relative to the opportunity implied by this analysis. Chand, Clemens and Dempster (2022) propose one regional mobility scheme: the ‘Pacific Skills Visa’, which could contribute to realising these gains. The heart of that proposal is pre‐migration training in vocational skills highly demanded by the Australian labour market—bundled with large‐scale access to the Australian labour market.…”

Estimating International Migration Flows for Pacific Island Countries: A Research Brief

“…Countries that receive large numbers of Pacific Islanders are facing population ageing and shortages of skilled and unskilled workers (Chand et al, 2021 ). As such, numerous schemes have encouraged migration from Pacific Island countries to move to New Zealand, the United States and Australia.…”