Welfare Policy and Labour Supply of Immigrants in Australia

This paper investigates the impact of social security payments on the labour supply of recent immigrants to Australia after the policy change. This research uses the first wave of two sets of Longitudinal Survey of Immigrants to Australia (LSIA) data as treatment group and Survey of Income and Housing (SIH) as control group to analyse the short-term immigrant labour market outcomes before and after the policy change. Employing difference-in-differences estimators and propensity score matching procedures, this study suggests that welfare reform caused a substantial increase in the employment of immigrants. This might imply that restricted access to welfare produced a higher proportion of new immigrants who more actively looked for jobs.