New Zealand needs to be more aggressive about recruiting more migrant workers if it wants to boost the economy, an economic think tank says.
The New Zealand Institute of Economic Research (NZIER) is calling for a more ambitious population policy, which it says will drive competition in business and push up incomes.
Net migration has averaged about 15,000 during the past 12 years, well below the government target of between 40,000 and 50,000.
The NZIER suggests doubling that target to about 80,000 people over 10 years would increase gross domestic product per capita by $410 annually and could inject an extra $1.8 billion into the economy annually.
NZIER senior economist Kirdan Lees said the Government needed to think of ways of making New Zealand more attractive to migrants.
"We think that the current framework is the right approach, so New Zealand has a points-based migration policy that favours some migrants over other types of migrants based on the skills that they would bring to the economy," Dr Lees said.
"What we're saying is what we need to do is actually think harder about the level of population we want and think about a population-based policy that would increase that over time."
That could mean tweak some of the migration parameters to start to lift the number of migrants into New Zealand, he said.
"The second thing we can do is also make New Zealand a much more attractive place for migrants to come and work and live and stay."
The main impact of increasing numbers of skilled immigrants would mean a huge long-term boost in population, driving entrepreneurial competition and bringing new skills to business.
"By growing that level of migration up to something around 40,000 people per year, New Zealand will gain from two key impacts - that firms will get complementary skills and more entrepreneurs into the country but secondly it raises the population base of New Zealand," Mr Lees said.
"That allows firms to get big, reach scale in our domestic market and you get some nice spillovers that will help New Zealand firms make products domestically and then export them to global markets."
The positive aspects of boosting the population through increased immigration far outweighed the short-term negative pressure on schools, housing and transport.
The results were in line with global evidence which said migrants had a positive impact on domestic residents' income, Mr Lees said.
But the Government said it would not bow to what it has described as "arbitrary" economic pressure to change immigration targets.
It admitted it had failed to entice target numbers during the past three years but expected that to turn around as the economy continued to improve.
Immigration levels were in line with New Zealand's economic and population forecast, and there were no plans to change them, it said.