NCCR (National Centres of Competence in Research) – On the Move: Conference by Frédéric Docquier (by Anne-Claude Lambelet)

On 26 May 2016, Frédéric Docquier, Professor of Economics at the Université Catholique de Louvain in Belgium, gave an NCCR conference on “Income disparities, population and migration flow over the 21st century.”

Without minimizing the importance of the current refugee crisis, his analysis adopts a longer-term perspective and focuses on the structural forces that affected past migration to industrialized countries, as well as those which will govern future migration flows. He presented worldwide projections of population, educational attainment, international migration and income for the 21st century. These projections reveal that if current immigration policies continue, immigration rates will remain fairly stable in most high-income countries, except in the 15 members of the European Union, where the average proportion of immigrants could rise from 7.5 to 17.2 percent. More than ever, the management of immigration will become a major societal challenge for Europe.

1. Can you give the SIETAR Switzerland Members a top line introduction of the world economy model you have developed to account for key interdependencies between demographic and economic variables? What scenarios have you considered?

The correlation between demographic and economic variables is high. The general premise of my analysis is that the interdependencies between economic and demographic variables cannot be ignored in long-run projection models. My model accounts for them and I believe this is a major advance compared to existing projection exercises.

My world economy model covers virtually all countries over the period 2000-2100. It endogenizes income disparities, migration, fertility and education decisions. Although the model is stylized and omits many (hopefully second-order) mechanisms, it accounts for the links between skill-biased emigration prospects, investment in human capital, income and population growth. I distinguish between 195 countries, populated by two types of adult workers (the college-educated and the less educated) and their offspring. The model is micro-founded and the specifications used for the utility function (governing education, fertility and migration decisions) and for the production function (governing income disparities within and between countries) are rather consensual and in line with the state-of-art literature.

Some structural parameters of the model are assumed to be time-invariant and identical across countries; they are taken from the existing literature. Other parameters are country-specific and calibrated so as to perfectly match the economic and socio-demographic characteristics of all countries in the year 2000 and/or over the period 1975-2000. I believe such a quantitative theory framework is an appropriate tool to identify the key factors governing the future of the world economy and of migration flows.

Inevitably, this model relies on scenarios. My scenarios are about the evolution of total factor productivity disparities between countries, education and fertility policies, and immigration barriers. In the benchmark, the trajectory of these country-specific parameters is such that I reasonably match the ‘High fertility’ population projections of the United Nations for the period 2000-2100, and the trends in TFP disparities observed during the past decades.

The benchmark foresees Total Factor Productivity (TPF) convergence between high-income countries, and between the BRICs (Brazil, Russia, India & China) and high-income countries. Contrary to the BRICs, the other developing countries will not catch up with high-income countries in the long-run. This is not more than one possible trajectory for the world economy, which governs the future of migration. However, I also consider multiple variants involving slower convergence for the BRICs, faster convergence for African countries, faster demographic transition in Africa, greater changes in education, or important immigration policy reforms in the US or in the BRICs.

2. What are the top societal challenges you see for Europe in terms of managing Migration Flows?

Overall, the projections show, that the trajectory of the world economy is sensitive to the technological environment. In particular, the evolution of productivity in transition economies and in Africa will have a drastic impact on the worldwide population size, income level, and global inequality. However, in all scenarios, the model predicts that immigration rates will increase in the 15 countries of the European Union. This is due to the fact that Europe is the main destination of African migrants and that, in all likelihood, the demographic share of Africa and the income gap between Africa and high-income countries will increase over the 21st century.

Population growth plays a key role. My benchmark scenario is totally in line with the projections of the United Nations. Africa represented about 10 percent of the world adult population in 2000; this share will reach 25 percent in 2100 (Africa will account for about one-third of the world population growth). On the contrary, the share of Europe will decrease from 13.9 to 8.0 percent over the same period. Keeping its immigration policy unchanged, the 15 members of the European Union will see their average immigration rate increase from 7.5 to 17.2 percent.

Obviously, the magnitude of the changes in migration rates varies across scenarios. The evolution of productivity in emerging economies and in Africa will have a drastic impact on the worldwide level of population, income disparities and the migration pressure to high-income countries. However, a large increase in the average European immigration rate (between +7 and +11 percentage points) is obtained under all the scenarios. In sum, the futures of Europe and Africa are closely connected.

3. How can countries and their relevant institutions as well as international organizations make the best use of this model to plan for these Migration Flows?

The ultimate goal of this type of exercise is to get the public opinion and policymakers to realize that the forces that governed the past trends in international migration keep going and could even intensify in the future. Generally speaking, if my projections materialize, Europe has three possible strategies to adapt to this situation: (i) improve the effectiveness of border control, (ii) improve the effectiveness of international aid, or (iii) improve the economic and cultural integration of African migrants.

Managing future migration flows is likely to be a complex task for the governments in Europe and I have no magic remedy to offer. I confess I am skeptical about the first two strategies. In a world of increasingly porous boundaries, it is impossible to prevent millions of workers seeking to reduce the gap between their position and that of people in wealthier places. More than ever, I think it is time to better investigate the conditions under which the economic and cultural integration of first- and second-generation immigrants is successful or not. There is an urgent need for better policy evaluations and more ambitious integration reforms.

Anne-Claude Lambelet is a French citizen and an ATCK (Adult Third-Culture Kid). She has been an active player in the global mobility service sector in Switzerland since the early 1980s. She is an Intercultural Competence Expert and a Career Development Coach. She holds a degree in Cultural Competence from the University of New South Wales and is the Vice-President of SIETAR Switzerland.

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