Migration has played an integral role in the development of New Zealand and has been especially important for its labour force and economy. The 2006 census found that nearly a quarter of New Zealand’s population is foreign-born (the OECD average is 10 percent). Foreign-born people also make up 25 percent of the working-age population. Many of these migrants are relatively recent arrivals with the foreign-born making up around 60 percent of the new additions to the working-age population between 2001 and 2006 (Nana and Sanderson, 2008).
Migrants create economic value for the country. A study in 2009 estimated that migrants contribute $1.9 billion annually to New Zealand’s gross domestic product (Nana, Sanderson and Hodgson, 2009). They also replace native-born New Zealanders moving abroad. In recent years, New Zealand has had the distinction of having the highest immigration and highest emigration rates among developed countries (Poot, 2009). Without these migrants, New Zealand would struggle to find skilled workers to meet industry demand and maintain its current population (Department of Labour, 2009). Migrants have also become more important in terms of tax revenue. The net fiscal impact of migrants (the amount of tax they paid less the entitlements they claimed) grew 80 percent between 2002 and 2006 (Slack, Wu and Nana, 2007).
The importance of immigrants for New Zealand’s labour market and economy is likely to increase in the future. This importance is mostly driven by demographic change from an ageing population. As the "baby-boom" generation enters retirement age, senior citizens (people aged over 65) will become an increasing proportion of the population, outnumbering children (people aged under 15) by 2023 (Khawaja and Boddington, 2010). As this group retires and begins to claim entitlements, there will be fewer workers to support them. The number of working-aged people (15–64 years) per person over the age of 65, known as the old-age dependency ratio, is forecast to change from 5 : 1 currently to 3 : 1 in 2032 (NZIER, 2012). This will ultimately put increased pressure on superannuation and the health care system since retired people are eligible for a variety of entitlements and generally suffer higher morbidity.
Migration can relieve some of these pressures in two ways. Migrants tend to be younger and of working age, thereby lowering the age of the working-age population overall and increasing its size. Migrants also have a positive net fiscal benefit that is larger than that of the New Zealand-born. This means migrants pay more in taxes than the cost of the government services they use compared with native New Zealanders. To achieve these benefits, New Zealand must not only attract high-quality migrants, but must also secure their settlement over the longer term.
Recent studies have highlighted the importance of migrant retention for New Zealand. Stillman and Maré (2009) found that migrants have significantly worse labour market outcomes than those of comparably skilled New Zealanders when they first arrive,3 but those who stay can achieve outcomes on a par with the comparable native-born after staying 10–15 years. Another study found that migrants’ total net fiscal impact to New Zealand increases the longer migrants stay: "the net fiscal benefit per head was $2,680 for recent migrants, $3,470 for intermediate migrants, and $4,280 for earlier migrants while the comparable figure for the New Zealand born population was $915 per head" (Slack, Wu and Nana, 2007, p 11). This means that for New Zealand to fully realise the fiscal and economic benefits of migration, it must retain, as well as select, high-quality migrants.
Given the importance of migrant retention to New Zealand, research is needed to better understand the determinants of remigration, particularly of migrants with the high levels of skills the New Zealand economy needs. This paper builds on previous studies and uses a survival analysis approach to identify the types of skilled migrants more or less likely to leave New Zealand.