How Valuable is “Two-Step Migration”? Labor Market Outcomes for International Student Migrants to Australia

Abstract

In the past decade, Australia has developed unprecedented reliance on skilled migrants, a process intensified by a period of sustained economic boom. By 2007, two-thirds were former international students recruited in Australia rather than offshore applicants, exemplifying a transition to what is termed “two-step migration.” How acceptable, however, are such onshore applicants to employers, in a context where Australia's 2006 skilled migration review found less favorable outcomes for former international students than migrants recruited offshore? To address this question, key education enrollment, migration and employment databases were analyzed in-depth. Overall, former international students were found to achieve comparable labor market participation rates to migrants recruited offshore. However, former students qualified in two-year courses and/or in oversubscribed fields performed worse than offshore migrants. Between 2007 and 2010, Australia introduced major policy reforms to improve the outcomes for international students applying under the skilled migration program. In February 2010, the government corrected education sector abuses while significantly changing selection processes. This decade of Australian policy experimentation may be instructive to other countries which have introduced study-migration pathways designed to attract and retain former students as skilled migrants.