Social Security: LUTZ

8/14/2019 Social Security: LUTZ

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Key Factors in Future International MigrationImmigration Forum, Social Security Advisory Board,

Dirksen Senate Office Buildung

Wolfgang Lutz, Leader, World Population Program

International Institute for Applied Systems Analysis (IIASA),Laxenburg, Austria



Outline

• Demographic uncertainties: We know more thannothing

• More immigrants versus higher fertility

• Long-term prospects for human capital:projecting population by age, sex and education

• Importance of policies: What forces shapenational immigration policies

• The force of cultural identity in limiting migration

• Immigration and unemployment



0.0 1.0 2.0 3.0 4.0

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

19601955

1950

1945females

0.01.02.03.04.0

0

5

10

15

20

25

30

35

40

45

50

5560

65

70

75

80

85

9095

100

105

European Union, 2050

Population (millions)

males

Age Period of Birth

Sergei's DELL PIII, file: C:\Sergei\Cur rent\Run\20 02\EU\[make_pyramid_to_file2_EU2 .xls],21-May-02 14:36



Uncertainty Range of Future Support Ratio in theEuropean Union 2000-2050

European Union, Support ratio

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2 0 0 0

2 0 0 5

2 0 1 0

2 0 1 5

2 0 2 0

2 0 2 5

2 0 3 0

2 0 3 5

2 0 4 0

2 0 4 5

2 0 5 0

Year

S u p p o r t r

a t i o

0.8

0.4

0.2

0.025

0.975

Median0.6

Fractiles

Sergei's DELL PIII, file: C:\Sergei\Share\EU\[presentation02.xls],21-May-02 13:56



Western Europe, Uncertainty Distribution ofProportion above Age 80 (2000-2100)

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

2 0 0 0

2 0 0 5

2 0 1 0

2 0 1 5

2 0 2 0

2 0 2 5

2 0 3 0

2 0 3 5

2 0 4 0

2 0 4 5

2 0 5 0

2 0 5 5

2 0 6 0

2 0 6 5

2 0 7 0

2 0 7 5

2 0 8 0

2 0 8 5

2 0 9 0

2 0 9 5

2 1 0 0

Year

P r o p o r t i o n a

b o

v e

a g e

8 0

0.8

0.4

0.2

0.025

0.975

Median

0.6

Fractiles

ergei's DELL PIII, file: E:\Current\R un\2000\NewTech ique\Simul\[pop_new21_4_de l1_sing5_c1.xls],06-Jun-01 07:36

UN “low”

UN “high”



Can Migration Compensate for the Missing Births?Alternative Projections of the Old Age Dependency Ratio for the EU-15 in 2050 based on

different Fertility and Migration Assumptions (Black line gives the level in 2000)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1 1.2 1.4 1.6 1.8 2 2.2

Total fertility rate

O l d - a g e d e p e n d e n c y r a t i o

MIG=0 MIG=400,000 MIG=800,000 MIG=1,200,000 Year 2000

z









1,200

800

400

0

2000 2015 2030 2000 2015 2030 2000 2015 2030

Estimated population aged 20-64 years (in millions) by levels of education,according to the “ICPD” scenario, 2000-30, in three economic mega-regions

Western and Eastern

Europe and North

America

China and Centrally

Planned Asia South Asia

No education Primary Secondary Tertiary



Policies Matter: But Who Determines Migration Policy?Diverging Interests in Receiving Countries

Three different dimensions tend to shape the process:

A: Interest of employers/ customers of local services – theywant cheap labor and high supply of labor – want more

immigration

B: Interest of workers – want higher wages, tight supply oflabor (differs by skill) – want less immigration

C: Interest in cultural homogeneity and preservation ofnational identity



Which of the forces dominate in politics and migration policy making ?

• Economic and political elites are often close to interests ofemployers (A)

• Middle class often has dual interests (A+B): Less competition forown employment, cheap availability of personal services

• For workers typically the interest in less competition/higher wagesdominates (B)

• Age pattern of interests:- young adults looking for jobs should want less competition

- young families should want cheap services

- Older working adults want less competition

- Retired persons want cheap services but also cultural homogenity

• Interests by level of education: Typically the higher the education theless the competition through immigrants

Changes in the composition of these interest groupscan shape national migration policy



National and cultural identity: A strong force in shapingnational immigration policies

• One might expect that it is a stronger force for small nations / language groups who have to fear about their survival (e.g. Finland).

• For bigger nations it can be driven by rivalry/dominance (France-Germany).

• National/cultural identity can become an all dominating force that ismore important than economic standing.

Example of Japan: Little to no immigration despite of most advancedpopulation aging, high wages, highest degree of automation.

Robots instead of immigrants

This could also be the future in several European countries



Does rapid population aging necessarily lead to a need for more immigration ?

• The proportion of the population of conventional working age (20-60) is onthe decline in many industrialized countries. Does this automatically lead toa “need” for immigrants to fill the “gap”, as is often claimed?

BUT:• In Europe unemployment is still on the rise, particularly among young adults

whose cohort size is already shrinking due to past low fertility (contradictionto Easterlin hypothesis).

• Unemployment is particularly high among the immigrants stock, typicallytwice the level of native born.

• Unemployment is clearly highest among the less educated.

• Why would Europe now need more of the same immigrants ?

• In 20 years, when the baby boom generation retires the situation may bedifferent.

• Even if there is no need for migrants today, the policy instruments should bein place to regulate more immigration when it may be needed.

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Social Security: LUTZ