Sunday, September 14, 2003

The World Bank and Replacement Migration


Back to yesterday and the World Bank economic forecast. Here is another extract on 'replacement' migration for Europe and Japan which makes it plain that they are coming round to the UN view. Bush is not the only one these days finding out he needs the UN! As they say, this alone will not solve the problem, but it will help. As they also note the objections are political not economic: so much for de-regulation.

The combined demographic effects of the baby boom that marked the immediate post-war period, the fall in fertility rates that began in OECD countries in the late 1960s, and longer life expectancy have led to a striking acceleration in population aging in virtually all advanced industrial societies. Population aging is much more marked in Europe and Japan than in North America, but all three regions will be affected. According to demographic projections by the United Nations, the populations of the European Union and Japan are expected to fall by 10 percent and 14 percent, respectively, between 2000 and 2050, representing a decline of some 55 million in all. In both Japan and the European Union, the dependency ratio (defined as the ratio of pensioners to workers) is expected to decline from five to one today to three to one in 2015.

For the United States, projections still point to an increased total population over the same period, but the dependency ratio also rises. Recent research has considered the economic and fiscal impact of these demographic trends in the OECD area (OECD 2000, 2001c, 2002; Visco 2000). Without offsetting measures, the growing dependency could place enormous strains on social security, Medicare, and pensions systems. Far-reaching decisions are required over the medium and long term to meet shifting labor demands and to safe-guard balance and equity in the systems of social protection—decisions related to the length of working life, levels of contributions and benefits, and productivity advances. One solution receiving increased consideration in several countries is to increase levels of permanent immigration to modify population structures and mitigate the social and economic costs of aging. Immigration has advantages. It can quickly increase the economically active population because new immigrants tend to be younger and more mobile. Also, fertility rates among immigrant women are often relatively high, which can help boost population growth. This has only a limited impact in the short run, however. Immigration alone cannot provide the answer to population aging, as demonstrated by simulations produced by the United Nations (2000). The simulations show that maintaining steady dependency ratios until 2050 would require an enormous increase in migration flows—for the United States and the European Union, migration balances would have to be at least 10 times the annual averages of the 1990s. Such scenarios seem implausible by historical standards, and in light of the likely political reactions.
Source: World Bank
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