Second Generation of Success

21 July 2014

Originally published by the Chifley Research Centre.

During a recent meeting at my local Khmer Buddhist Temple, a visiting senior Asian politician recounted to me a joke that got me thinking: what’s the difference between a migrant taxi driver and a university professor? The answer: one generation.

During a recent meeting at my local Khmer Buddhist Temple, a visiting senior Asian politician recounted to me a joke that got me thinking: what’s the difference between a migrant taxi driver and a university professor? The answer: one generation.

Some valuable recent research speaks to the truth in this observation about second generation migrants.  And it gels with our experience: all of us can cite examples of first generation Australians we have met who work around the clock in often low-paid roles to give their kids an opportunity to overachieve at school and then into university and beyond.

Thinking about the 500 Cambodian migrants that live in my community, for example, and the other 188 ethnic groups there, it’s clear to me that one of the most overlooked factors in our national discussion of immigration has been the substantial role that migrant Australians and especially their children can play in building our economy and creating future jobs.

Our economic history is peppered with the success stories of migrants, whether they be new arrivals or their offspring. From the Chinese who made a life for themselves in Australia after the gold rushes in Victoria and again more recently, to the Carla Zampattis and Frank Lowys who have built the face of Australian business, we owe a large portion of our economic success to migrants.

Increasingly though, demographers have highlighted the children of migrants – that is second-generation Australians – as key contributors to our national success. Studies over the last decade have shown, for example, that the second generation is over-represented among graduating classes at our universities.

Recent research has also shown that the labour force participation rate among second-generation Australians is higher than both that of first-generation migrants and the Australian average. So no proper discussion of immigration in our country can neglect this influence migrants’ kids.

Academics have been writing for years now about the “brain waste” that migration can cause. Brain waste occurs when highly-qualified migrants end up in jobs that don’t fully utilise their skills and experience. Too often in my highly diverse community in Logan, I see qualified engineers and pharmacists working in unskilled employment, usually because they have not developed the language skills or community connections of their Australian-born equivalents.

It’s not all bad news though. Evidence from Australian demographer Graeme Hugo has shown that the economic contribution, measured by labour force participation, of humanitarian migrants converges to the Australian-born average as they spend more time here. And there are high-profile examples of our migrant entrepreneurs who contribute well-above the national average, overcoming the hurdles that come with starting a life in a new country.

In fact entrepreneurialism is something that migrant Australians and their children often display in droves. Hugo points to ABS survey data which shows that 30 per cent of small businesses in Australia are owned by immigrants. Migrants outperform the average population on this measure, which research suggests is due to ethnic cultures encouraging entrepreneurialism, a lower likelihood to accept the status quo and a greater propensity to take risks.

This last point conforms well with our experiences of small businesses in local communities. For people who have uprooted and travelled around the world – often leaving family and unpleasant political circumstances behind – there is often an exceptional drive and an uncommon desire to succeed and contribute to their new home country. This entrepreneurialism and enterprise is regularly inherited by their children.

In an excellent recent speech, the Deputy Governor of the Reserve Bank, Philip Lowe, discussed the effects of Australia’s changing demographics on productivity and innovation. He indicated that Australia’s rapid population growth (by OECD standards), will feed a form of dynamism that will improve innovation and create growth.

This dynamism comes from more than just the growth in the size of our population. Lowe discusses the importance of risk-taking to achieve innovation. The risk-taking tendency of migrant Australians and their children, mixed with their heightened motivation to achieve in their new home, makes the first two generations of Australians perfectly placed to contribute as self-sustaining actors in a more competitive, dynamic and innovative economy.

While immigration takes investment in the short-term, both by government and by communities to achieve greater integration, history has proven time and time again that this investment pays enormous dividends. That’s why the long-term economic contribution of migrants and especially their second generation will be vital for our continuing national and economic success.

First published by the Chifley Research Centre.