What is migration really worth?
Written and accurate as at: May 03, 2023 Current Stats & Facts
The economic evolution of a nation is significantly influenced by migration, as evidenced by the experiences of Australia and Japan. Over the past two decades, these two countries have adopted markedly different approaches to migration, resulting in divergent economic trajectories. This article examines the impact of migration on the economies of Australia and Japan, focusing on aspects such as housing prices, GDP per capita, and wealth per capita.
Australia, known for its vibrant multicultural society and accommodating immigration policies, has benefitted substantially from its migrant population. According to the Australian Bureau of Statistics (ABS), between the census year 2001 and the census year 2021, Australia's population increased by nearly 6 million, largely driven by immigration. In 2021, the ABS indicated that close to 30% of the Australian population was born overseas, emphasising the profound effect of migration on the country's demographic composition.
In contrast, Japan has historically implemented stringent immigration regulations. Confronted with an ageing population and a diminishing labour force, Japan has only recently started cautiously considering migration as a solution to these demographic predicaments. The Statistics Bureau of Japan disclosed that a mere 2% of the country's population consisted of overseas-born citizens in 2021. Furthermore, between 2010 and 2021, Japan's population declined by nearly 1 million, underscoring the nation's demographic difficulties.
The Australian housing market has experienced considerable shifts due to migration. CoreLogic data shows that over the same period between 2001 and 2021, median dwelling prices in Sydney soared by around 189%, while Melbourne saw a 186% increase. Rising demand for housing, spurred by population growth, has contributed to elevated property prices in key urban centres.
Over the past two decades, Australia's GDP per capita has exhibited consistent growth, highlighting the positive influence of migration on the nation's economy. According to World Bank data, Australia's GDP per capita climbed from USD 21,622 in 2001 to USD 55,060 in 2021, signifying enhancements in living standards and general economic welfare. Furthermore, the Credit Suisse Global Wealth Report 2021 reveals that Australia's wealth per adult jumped from USD 182,580 in 2001 to USD 514,059 in 2021, driven by factors such as escalating property values and increased economic activity, both connected to migration.
In comparison, Japan's housing sector has been impacted by its restrictive migration policies. Data from the Japanese Ministry of Land, Infrastructure, Transport, and Tourism demonstrates that the average price of a new condominium in Tokyo increased by just 30% between 2001 and 2021. The waning population has led to reduced housing demand, resulting in property oversupply and stagnant property values.
Japan's GDP per capita growth has been relatively sluggish compared to Australia's. World Bank data indicates that Japan's GDP per capita increased from USD 34,362 in 2001 to USD 42,945 in 2021. The Credit Suisse Global Wealth Report 2021 shows that Japan's wealth per adult increased from USD 248,692 in 2001 to USD 381,678 in 2021, which is considerably lower than the growth observed in Australia. The restrained wealth accumulation in Japan may be linked to its conservative migration policies and their impact on the labour market and housing sector.
In conclusion, the comparison between Australia and Japan clearly demonstrates the significance of migration in shaping a nation's economy. Australia's open migration policies have contributed to population growth, a dynamic labour market, a thriving housing sector, and increased wealth per capita. On the other hand, Japan's conservative approach to migration has resulted in a different economic trajectory, characterised by a declining population, stagnant housing prices, and relatively slower growth in GDP and wealth per capita. The contrasting experiences of these two nations underscore the need for countries to carefully consider the role of migration in their economic strategies. By analysing the successes and challenges faced by Australia and Japan, other nations can develop tailored policies that maximise the positive impacts of migration while mitigating potential drawbacks. Ultimately, a balanced and well-informed approach to migration can facilitate economic growth, social cohesion, and overall prosperity for countries navigating the complexities of an increasingly globalised world.