Temporary migration and wage inequality: The effects of skills, nationality and migration status in Aotearoa New Zealand

Abstract

This study focuses on the labour market dimensions of temporary migration by quantitatively exploring the relationship between temporary migration and wage inequality. Over recent decades, there has been a growing emphasis on migration management in shaping migration policies across the world, especially in the Anglophone settler societies. At the same time, temporary migration policies have been criticized for contributing to the creation of inequalities. This study investigates wage inequality among temporary migrants between 2010 and 2019 in Aotearoa New Zealand, a period when the number of people holding temporary visas more than doubled. Despite the increase in this population of temporary migrants, our analysis of administrative data has shown that the overall level of wage inequality of temporary migrants holding work visas declined between 2010 and 2019. The study uses the Shapley-value decomposition approach to quantify the contributions of skills, nationality and migration status on wage inequality, factors that are associated with the migration system and the composition of migrants. Results suggest that skills and nationality were the key factors that have led to decrease wage inequality over the period. In contrast, migration status has a small countervailing effect on the decreases in wage inequality. Our analysis concludes that wage inequality is shaped by two factors in the case of temporary migration. The first is the migration system itself which sets different conditions for migrants in terms of skills and migration status, and the second is the composition of the migrant population.