THE ROLE OF MIGRATION IN MODERATING THE EFFECTS OF POPULATION AGEING

Georges Tapinos, Professor, Institut d’études politiques de Paris

1.           Demographic prospects, ageing and immigration

The outlook for population trends in OECD Member countries over the next half-century points to two distinct possibilities.  These are a decline in total population in the countries concerned and, at the same time, increased population ageing, i.e. a rise in the proportion of elderly persons (aged over 60 or 65) relative to the total population and an increase in the proportion of elderly non-working persons to working-age persons (or dependency ratio as between persons aged 15 to 64 and those aged 65 and over).

Where population numbers are concerned, demographic growth, in the absence of migration, is determined over the long run (steady state) by fertility.  Consequently, if fertility remains at a level that does not ensure the replacement of generations (less than 2.1 children per woman), this will ultimately cause the total population to fall.  Only an upturn in fertility can halt the decline in population numbers.  Ageing, on the other hand -- in countries where life expectancy at birth is already high -- results not only from declining fertility but also, and above all, from increased longevity, i.e. a decline in the probability of death at advanced ages.  This being so, a moderate but tentative upturn in fertility would not be sufficient to offset the inevitable effect of the desirable advance in life expectancy.

The extent to which migration could alter the demographic prospects therefore depends on the objective sought.  Basically the aim could be either to prevent the total population from declining or to hold constant the ratio of retired persons to employed persons, or at least curb the unavoidable deterioration in this dependency ratio.

The magnitude of the requisite migration flows, or more accurately net migration, will not be the same in both cases.  The first objective will be attained if net immigration is equivalent to the excess of deaths over births.  In a dynamic perspective it is necessary, of course, to factor in the age structure of net immigration and the differential fertility of immigrants.

On the other hand, to hold at present levels the ratio of elderly inactive persons to active persons is more problematic.  In this case it is necessary to offset a rise in the dependency ratio from 4 or 5 to 1 at present to 2.5 or even 1.5 to 1 in 2050, according to the demographic prospects for the countries concerned.  And, in this respect, the age distribution and population dynamics of immigrants are key factors here.  Immigrants have children but they also age.

2.           Ageing populations and migration in OECD countries

In spring 1998 the OECD published a report on ageing populations, Maintaining Prosperity in an Ageing Society.  The report highlights the prospect of rising shares of the elderly in the population and falling shares of the population in employment to support pension and health systems.  Policy choices therefore have to be made for the medium-long term in order to meet this demographic challenge.  Policies aiming to raise fertility rates or encourage immigration are those most frequently mentioned. The report suggests that the range of possible demographic outcomes of migration (likewise fertility) over the next three decades is fairly limited, hardly slowing-down the ageing process.

More recently, in March 2000, the Population Division of the United Nations published a report entitled Replacement Migration: is it a Solution to Declining and Ageing Populations? (United Nations, 2000).  This report, which starts from the premise that several OECD and non-OECD countries will face population decline by 2050, other things being equal, presents five different scenarios showing the number of net migrant arrivals needed to wholly or partly offset the expected demographic deficits.

The simulations the most often cited in the press, involving a constant old-age dependency ratio until 2050 , imply a very large volume of arrivals and departures and fluctuations in migration.  These translate into an exceptional increase in total population and in the proportion of immigrants.

1.       The level of annual net migration needed to hold the dependency ratio constant is very high and disproportionate to the data on record.  The extreme-case scenario posits an unchanged dependency ratio (the number of persons aged 15 to 64 out of the number of persons aged 65 and over) until 2050 as a result of greatly increased migration.  In the case of the United States this would mean an average net settlement of  11.8 million immigrants per year until 2050, compared with 10.4 million for Japan, 3.6 million for Germany and 2.2 million and 1.7 million respectively for Italy and France.  For the United States and the European Union countries, these figures are at least ten times higher than the averages recorded for the 1990s (see Trends in International Migration, OECD, 1998).

2.       Given the age structure and dynamics of immigrant populations, the number and proportion of foreign-born persons and their descendants would reach disproportionately high levels, compared to the current ones, by the scenario's horizon date of 2050.  In 1990 the recorded proportion of foreign-born persons was 10.4% in France, 6.4% in Germany, 0.7% in Japan and 7.9% in the United States.  At the scenario horizon, on the other hand, the proportion of immigrants who arrived in 1995 and their descendants would be 68.3% of the total population in France, 80.3% in Germany, 79% in Italy, 87.2% in Japan and 72.7% in the United States (United Nations, 2000).

3.       In the same vein, the total population of the United States in 2050 would be just over 1 billion and that of the fifteen EU countries 1.2 billion.

4.       In addition, an unchanged dependency ratio over time presupposes huge fluctuations in migration flows (arrivals and departures) but also in net immigration, given age structures and population dynamics (Blanchet, 1988).  This point is disregarded in the United Nations study, which assumes continuous inward migration with no outflows.

The present demographic situation in OECD countries reveals that, by comparison with North America, population ageing is clearly more significant in the European countries and Japan.  It is in these countries that global labour shortages will be the most pronounced over the next twenty-five years, even if improved productivity and the use of surplus labour force temporarily ease labour demand during the transitional period.

The following analysis focuses on the practical and political issues involved in the implementation of an effective demographic cum labour market-oriented immigration policy, so that OECD Member countries may have a clearer idea of the extent to which international migration can contribute to positive outcomes.  The main reference source used has been the work done under the aegis of the OECD Working Party on Migration.

3.           The limitations of migration policy as a response to demographic decline and labour market requirements

Recourse to immigration has the advantage of producing an immediate and relatively large impact on the labour force owing to the characteristics of the new arrivals, who are younger and more mobile.  In addition, fertility rates among female immigrants tend to be high, which contributes to population growth, albeit to a limited degree.  At the same time there are a number of practical and political constraints in formulating a migration policy aimed at achieving demographic change.  A number of these difficulties were outlined in Migration: The Demographic Aspects (OECD, 1991).  The main conclusions drawn from that study are taken up and developed here.

Is a policy that relies solely on migration to achieve demographic adjustment desirable?  There are five points to be made here:

1.       Most OECD countries share the same demographic pattern and the bulk of immigrants would have to come from outside the OECD area.

2.       Such a policy sees migration as a control variable.  In other words, it presupposes control of the volume and age structure of migration inflows and outflows. Migration policies could make entry more dependent on age requirements, which are already explicitly or implicitly present.  However, there are still many factors that limit, or complicate, the ability to control and select migration flows: the agreements on free movement of persons, the persistence of illegal immigration, humanitarian grounds, and other constraints like admission for reasons of family reunification.  The acceptance of refugee cannot, by definition, be governed by demographic and economic criteria.  Similarly, the selectivity applied to close relatives and other family members has its limits.  And if immigration targets emphasise age or fertility patterns, this may be seen as a form of discrimination and hence a political issue.  In the last analysis, all will depend on the philosophy underlying each country's migration policy and on its proper characteristics.

3.       Experience has shown that migration policies have an impact on the number and characteristics of immigrants, but have virtually no effect on return migration; hence the difficulty of controlling the volume and characteristics of net migration. One way around this difficulty would be to introduce programmes for admitting temporary workers in order to increase labour supply in periods of rapid growth in the elderly population or decline in the population of working age.  But experience has shown that such programmes are difficult to implement.  Although most countries have legislation for the admission of temporary foreign workers (see the special chapter on temporary employment of foreigners in selected OECD countries in Trends in International Migration, OECD, 1998), it has been found that a proportion of the immigrants admitted on this basis settle permanently in the host country.  This they do either legally, by applying for a change of status or having their permits regularly renewed, or illegally.  Furthermore, other than in cases where the authorised stay is very short, some countries' temporary employment programmes offer the worker's dependants and close relatives the right to reside in the host country.

4.       There is still some uncertainty about whether policy targets are actually attained.  The means available to monitor the trend of net migration differ across countries.  In a large number of European countries, population registers make it possible, with some difficulty, to measure international migration with reasonable accuracy over successive periods.  In other countries, regular estimates pose more problems: arrivals are often measured by the number of permits issued (which does not cover all categories of arrivals), while departures are estimated very roughly with hardly any information given about the individuals concerned.

5.       In addition to population dynamics there is the very different question of social dynamics.  The history of North American and European migration shows that immigrants have a better chance of integrating into the host society if the native population is experiencing a natural increase.  Fertility and immigration are complementary, not substitutable.

In conclusion, immigration is clearly not the solution to population ageing.  It can even be said that the simulations made to date demonstrate the impossibility of a migration solution, and the analysis of migration processes reinforces this assessment.

4.           Finding realistic demographic objectives for migration policy

Is it possible, even so, to use immigration to reduce the imbalance in a population's age structure?  Excluding the extreme hypothesis of immigration's substitution for natural population increase, what would be a realistic volume of immigration acceptable to host societies?  What share of demographic adjustment can be expected of immigration?

Two preliminary observations to provide a frame of reference:

1.       It should be noted that the steady-state dependency ratios used for the calculations referred to earlier are not really appropriate.  First, they are demographic ratios that compare age groups (15‑64 and 65 plus), whereas the relevant indicator is the ratio of retired persons to employed persons.  Depending on female participation and unemployment rates and their trend, there may be a significant difference between the two ratios.  Second and more importantly, the baseline ratios reflect the steep population growth of past years and therefore cannot be used as steady-state ratios.  If unending population growth is not envisaged, the reference has to be the stationary population.  According to the United Nations the 15-64/65 plus ratio in France is 4.36 to 1 in 2000.  According to Blanchet, the ratio of employed to elderly inactive was 2.7 to 1 in 1990; on the basis of a stationary population this ratio would have been 1.7 to 1 (Blanchet, 1992).  Reference to a stationary population is all the more justified in that the theoretical studies show that, on the assumption of a constant number of migrants with a constant age structure, the total population ultimately becomes stationary.

2.       The projection horizon is also important.  The size and age structure of a population result from a process of renewal in which the number of migrant arrivals and departures, length of life and duration of stay induce fluctuations over time.  The 2050 horizon is acceptable but arbitrary.  From a 1990 or 1995 base year it represents a span of roughly two generations.  On the one hand, it may be seen as too long, since behaviour may differ from one generation to the next.  On the other hand, it is too short for the full effect of population dynamics to work through, assuming stable behaviour including fertility.  For example, in 2020, according to Feld, practically all the EU countries will have the same-sized total population and labour force as now, barring the unlikely combination of very low fertility, high mortality, low immigration and constant labour force participation rates (Feld, 2000).

The question is thus to know which is the objective sought?

The goal of migration policy may be to ensure sustainability of the nation, to adjust labour supply to demand by volume and by structure, or to bring health and pay-as-you go pension systems into financial equilibrium.  There is also the humanitarian approach in the acceptance of a certain number of immigrants regardless of political or economic considerations.

1.       Immigration can certainly help to prevent population decline for a time.  It has only a marginal impact on the cited imbalances in age structure.  The equilibrium of social welfare systems depends on a set of institutional, demographic and institutional parameters: age of accession to the active labour force, participation rates and unemployment rates, contribution rates and benefit levels, economic growth rates, productivity growth rates, etc.  Given the predicted drastic change in the dependency ratio (the proportion of dependants doubling or even trebling between now and 2050), it is quite impossible to count on just one variable to achieve the necessary adjustment and treat all the others as constants.  But although replacement migration cannot be the whole answer to the problem, there is still the matter of immigration's possible contribution.  This has to be related to a set of goals.

2.       The question can now be put as follows.  In the general interest of the nation (in economic and societal terms), what thrust should be given to migration policy, particularly as regards the age of migrants, so that it will contribute, inter alia, to the objective of labour market adjustment and balancing of the population's age structure.

Immigration policy can be no more than a partial (and even imprecise) means of action to curb the process of population ageing, but the motivation for implementing such a policy must be sufficiently strong

1.       A radical shift in immigration policy to raise the level of employment and reduce the old-age dependency ratio is realistic only if labour shortages are very acute and perceived as such by governments and public opinion.  In this regard, a continuing high level of structural unemployment in many OECD countries and/or low participation rates for women would indicate that the female labour reserve could be tapped in order to increase labour supply without resorting to additional immigration.  The report Maintaining Prosperity in an Ageing Society emphasises, among other recommendations, the need to reverse the present trend towards earlier retirement.

2.       Immigration is still a particularly sensitive issue, and even though there is clearly a will for change, it may be thwarted by the fear of governments to provoke a debate or lose the opportunity to introduce a timely and workable policy.  However, current legislation is flexible enough to allow changes in the volume and pattern of immigration and in the allocation of resources among the different sectors of migration policy (flow control, selective recruitment, and integration).

3.       At present, there is a preference for mechanisms which cater for temporary labour migration to increase labour supply, rather than policies calling for permanent immigration.  The ease with which countries may shift the focus of immigration policy towards demographic objectives varies widely.  Some countries already have a comprehensive and co-ordinated approach towards immigration (notably Canada and Australia), including age-related selection criteria for some categories of immigrant.  Others do not apply age criteria as such, but their immigration systems in practice determine the age distribution of entrants.  This is the case with the preference system used in the United States.  Similar practices are applied in Europe, where regularisation of status is confined essentially to working persons.  Other countries, if they decided to move over to a policy of permanent immigration, would have to introduce new immigration programmes and alter their policy content and goals accordingly.

4.       Migration policies based on convergent strategic interests are possible between countries deeply affected by demographic decline and those experiencing high population growth, if the motivation for such policies is strong enough.

5.           Conclusion: migration policy goals and mechanisms as related to population growth and labour supply and demand

Given the diversity of countries' objectives and practices in regard to immigration, what line might migration policies take in the decades ahead?

Leaving aside the question of refugees and asylum seekers, the equilibrium in the labour market is the common preoccupation to OECD countries.  Not only the European countries primarily seeking short- and medium-term adjustment of the labour market, but also the countries essentially interested in permanent immigration, must make allowance for the predicted long-term developments and especially the steep decline in the 15‑64:65 plus ratio.  This means that they must shift their policy focus so as to attract younger migrants with a wider variety of skills.

Making use of present policy mechanisms and without attempting to hold constant the ratio of working to elderly non-working persons, countries could develop arrangements for immigrant entry and selection that would meet both the medium-term objective of labour market equilibrium -- in terms of numbers and skills -- and the long-term objective of easing the imbalance between working and elderly non-working by way of increased productive capacity of working persons.

TECHNICAL NOTE

              Two approaches, analytical and empirical, have been used in measuring the effects of migration on population growth.  With the analytical approach, stable population theory is extended from the context of a closed population to that of an open population. The object of the exercise is to determine the impact of migration on population dynamics.  Can population growth be slowed by emigration, can population change be influenced by recourse to immigration.

              From the standpoint of a country of departure, it has been shown that discrete emigration at a given moment of time, however large-scale, has no impact on the intrinsic rate of natural increase.  For emigration to reduce population growth there has to be a constant outflow of individuals who have not outlived the reproductive period.  The force of the impact depends on the age of emigrants.  The younger they are (including below the reproductive age), the heavier the impact will be (Keyfitz, 1971).

              For countries of arrival, it is desired to know whether immigration can be a fertility substitute to prevent population decrease and adjust age structure.  A series of studies have shown that, assuming fertility to be lower than the population replacement rate, a constant flow of immigrants with a constant age structure will lead the population to become stationary.  The size of this stationary population will be in direct ratio to the youth of the migrants and not of the initial population (Espenshade, Bouvier and Arthur, 1982).

              The same findings would recur in the simulation exercises if projection horizons were sufficiently distant.  As a rule, the horizon is much too short (50 years).  Moreover, in these exercises the aim is different.  It is not to calculate the stationary population that would result from constant immigration, in numbers and age structure, and the time taken to get to that point.  Instead it is to calculate the number of "net migrants", assuming their age structure as given, that would be needed to maintain a stationary population and/or a constant dependency ratio.

              These simulations, and particularly the UN calculations, rest on a set of technical assumptions that have a marked influence on the results.  The approach is strictly demographic, using only numbers and age distributions.  The dependency ratio is conventionally defined as the ratio of persons aged 15-64 to those aged 65 and over.  Permanent immigration is assumed, with a constant age structure of net migration.  In the absence of data for return migration and hence for net migration, the simulations use the observed age distribution of entrants and assume that all of them settle permanently.  Hence return migration is assume to be nil.  Nevertheless, some estimation for France and the United-States shown that they represent an important percentage of total inflows.  Migrants are assumed to have the same fertility and mortality rates as the native-born.  Furthermore, with the simulation technique used, it is not possible to calculate the proportion of foreign-born individuals at the projection horizon, but only the proportion of persons who entered the country of reception after the projection base year (1995) and their descendants, most of whom were born in that country.  These proportions are not comparable with those of foreign-born individuals observed in the projection base year.

annex

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