Sunday, September 17, 2006

Migration Ireland

by Edward Hugh

This may not exactly comes as breaking news, but the Irish Central Statistical Office published a report earlier this month giving population and migration estimates for 2006. And of course what we learn from reading that report is that immigration now constitutes some two thirds of the annual Irish population increase (the other component coming naturally from increasing life expectancy, since fertility is now below replacement level).

In fact we learn that 86,900 people migrated into the Republic of Ireland between May 2005 and April 2006, and that this was the largest number of immigrants received by the Irish republic since record-keeping on immigration began two decades ago. 43% of the migrants came from the EU member states in Eastern Europe, with 22,900 of these coming from Poland and 6,100 from Lithuania.

On the other hand the rate of Irish emigration has been declining continuously, and in particular Irish migration to the US, which has been declining since 2002 and is now running at record lows: last year 1,400 Irish citizens resettled in the United States, compared with 4,800 in 2002.

The Irish economy clearly needs labour, having as it does one of the fastest growing economies in the European Union, and since fertility is now down to around the 1.9 Tfr level the younger generations are starting to contain less people. Indeed less and better educated young people, since there has been a veritable explosion in tertiary education in Ireland in recent years, with 55% of those completing secondary education now progressing to the tertiary level.

Obviously, in part, Ireland has been experiencing its demographic dividend (see this post Europe's Tiger for some exploration of this topic, and also see this post and comments for discussion of the issues involved in relation to fertility and migration in Morroco.

Here's an interesting review of Ireland's migration history from Migration Information Source.

Key Quote:

"In 1996, Ireland reached its migration "turning point," making it the last EU member state to become a country of net immigration. The main reason: rapid economic growth created an unprecedented demand for labor. Unemployment declined from 15.9 percent in 1993 to a historic low of 5.7 percent in 1999. While total emigration flows have remained significant (with an annual average of about 24,800 during 2000-2003), total inflows increased markedly in the mid-1990s".


Some Additional Data


In May 2006, the number of EU-8 nationals requesting the PPS income/social security numbers required to work in Ireland topped 206,000 for the first time. They included 116,000 Poles, 35,000 Lithuanians and 18,000 Latvians. Some of those who had been waiting for the PPS number may have returned home before it was granted.

The 2006 Irish census is expected to find 400,000 foreigners in Ireland, making them over 10 percent of the population. In the 2002 census, foreigners were six percent of the 3.9 million residents.

The AIB bank reported that 159,300 foreigners were employed in Fall 2005, eight percent of total employment of two million. Irish foreign workers included 27,800 employed in manufacturing; 23,100 in hotels and restaurants (they were 20 percent of this sector's work force); 22,600 in construction; and 21,000 each in education and health services and business services.


The above comes from this article. They also make the following point.

Low interest rates have fueled a construction boom in Ireland, which has increased employment of migrants; about 13 percent of Irish workers are employed in construction, up from eight percent in 1997. However productivity growth slowed, and economists warn that, if interest rates rise, construction could slow sharply.

This is very similar to what has been happening in Spain. The question is, is the construction boom sustainable? In the long run it obviously isn't. In the short run it can even actually feed on itself, as the boom sucks in more immigrants, who then want to buy houses. This is all being paid for by having low interest rates thanks to the ECB. Normally I tend to argue that this situation was undesireable, especially when you take into account inflation rates in Ireland and Spain. However we are not living in 'normal' circumstances, there are substantial - demographically related - global imbalances, and it is not clear how these will 'correct' themselves. If Ireland and Spain can hang on to the migrants they have attracted when the property boom stabilises, then they will have made a 'one off' population pyramid adjustment which will be advantageous for them. Basically they can postpone the day of 'settlement of all debts', and thus they will have bought time. This may be a real advantage since time will mean more room to manouvre as the reality of what is happening elsewhere gradually sinks in.

So there are definitely plusses and minues here. It is very hard to call this situation. High interest rates will *not* be coming (in any meaningful and sustained sense) so long as we have the euro, the needs of Italy and Germany for growth virtually guarantee this.

12 comments:

Anonymous said...

This is a very odd post. Two things jump out.

"The other component coming naturally from increasing life expectancy, since fertility is now below replacement level."

And ...

"Fertility is now down to around the 1.9 Tfr."

Both of the above are just wrong.

Births exceeded deaths in 2005 by 34,200. If mortality had remained unchanged from 2005 to 2006, then the net natural increase would have fallen to 32,600. Precisely 1.5% of Ireland's population growth was due to lengthening lifespans in 2006, not one-third.

Meanwhile, TFR is 1.98 ... up from 1.85 in 1994 and 1.90 in 2000.

All the above comes off the Irish statistical office's website.

Edward said...

Hi anonymous,

"Births exceeded deaths in 2005 by 34,200. If mortality had remained unchanged from 2005 to 2006, then the net natural increase would have fallen to 32,600. Precisely 1.5% of Ireland's population growth was due to lengthening lifespans in 2006, not one-third."

Just to clarify some things. The main point of the post was that two thirds of Ireland's population growth now comes from immigration. This is what is driving population growth at this point, and that this is a major change for Ireland.

This situation is not unusual, but fits a growing global trend.

Secondly, if I suggested that the other one third was only a product of life expectancy change I am sorry. Clearly Ireland still is having more children than some other European countries like Germany and Italy. But fertility *is* below replacement now.

"Fertility is now down to around the 1.9 Tfr."

One of the problems here is that there is a variety of data knocking about. This is also why I said *around* 1.9. This number comes from the CIA world factbook. I used this particular number since it is of easy access and allows comparison with other Tfrs in their published list.

The population reference bureau - which is the other global entity which monitors fertility also gives 1.9.

"Meanwhile, TFR is 1.98 ... up from 1.85 in 1994 and 1.90 in 2000."

Well clearly there has been a slight recovery in the Tfr since 1994, but very slight. This can in part be due to the impact of migration, since migrants are laregly in the young childbearing ages. This then has a statistical impact.

The other principal reason will be movements in the birth rate driven by fluctuations in the rate of birth postponement.

The main reason for the ongoing decline in Tfrs across countries is birth postponement. This takes place as populations (and especially female populations) become more educated and leave having children until later. This then results in lower than anticipated fertility since many women subsequently find that they have postponed too long and have difficulty having children, they become less fertile.

Obviously the rate of postponement varies from one society to another. The key variable in postponement is mean age at first birth. This age has been rising steadily in Ireland and according to the last available stat published by UNECE was at 27.6 in 2002. Spain and the Netherlands are currently the countries with the highest MAFBs - around 30 - but it is not unreasonable to imagine that other countries will follow this path, since the move up the value chain is very much associated with postponement.

This is why I mentioned education in Ireland, and in particuar female education. It looks pretty much as if there is a good bit more mileage in the postponement process to be expected in Ireland, and this will be reflected in reduced fertility, at least for a time.

"Meanwhile, TFR is 1.98 ... up from 1.85 in 1994 and 1.90 in 2000."

Whatever the slight differences in the stats used, I take it we are agreed that Ireland has below replacement fertility (which is commonly agreed to be 2.1). In which case the natural tendency of the population is to decline, and the only way births can remain above deaths is by people living longer. This is a simple and basic point.

"This is a very odd post."

The main point of the post was not that Ireland is in imminent danger of lowest-low fertility. Whether or not that comes to pass will depend on the rate of birth postponement, and whether or not the housing boom is sustainable, since, of course, if they were to have a serious recession this would affect birth timing decisions.

The point of the post was that Ireland has been getting its demographic dividend, and has been enjoying a win-win process of high economic growth and high inward migration in a way which helps to strengthen the population pyramid. I find this both interesting and relatively good news.

But there may be something which I am missing in what you wish to say, in which case please go ahead.

S.M. Stirling said...

"This can in part be due to the impact of migration, since migrants are laregly in the young childbearing ages. This then has a statistical impact."

-- not on TFR, it doesn't. TFR is more significant than the Crude Birth Rate precisely because it isn't affected by changes in the relative size of age-cohorts.

Immigration of people in the young-adult category may push up the CBR, but it doesn't affect the TFR at all.

S.M. Stirling said...

In fact, immigration of people from Eastern Europe (which is where most of Ireland's immigrants come from) will probably _depress_ the TFR, since the source countries have much lower fertility than Ireland.

Edward Hugh said...

"Immigration of people in the young-adult category may push up the CBR, but it doesn't affect the TFR at all."

I think, Sterling, that there may be a point here which is worth clarifying, since it relates to the whole debate about pyramid structure, postponement, and missing births. Wolfgang Lutz has been pushing this argument for all he is worth, but few seem to have seen it's importance.

"TFR is more significant than the Crude Birth Rate precisely because it isn't affected by changes in the relative size of age-cohorts."

In this sense you are absolutely right. If, however, as is the case in eg the US, migrants have a slightly higher birth rate than locals (hispanics 2.8 tfr, US as a whole 2.0) then this pushes up the tfr.

If there are a lot of migrants like this in the childbearing age years, then this pushes temporarily up the tfr a lot.

But migration does more than this, since it changes the shape of the pyramid, not by the tfr effect, but by the cbr one.

Basically, tfr is a measure of the average per woman, while cbr is a measure of the relative size of the cohort in the total population as well as the tendency to have children. So migration 'thickens' some cohorts, and this is part of its importance, it slows the inversion of the pyramid.

S.M. Stirling said...

"So migration 'thickens' some cohorts, and this is part of its importance, it slows the inversion of the pyramid."

-- well, yeah, for a little while.

But say reproductive-age Polish people migrate to Ireland, and assume they have the same reproductive behavior they would in Poland.

That means they'll have 1.25 children per woman on average; as opposed to 1.86 for the native Irish.

So over the lives of the migrants (assuming again that they retire in Ireland) they make the dependency situation _worse_.

In fact, it's worse than that example would indicate since migrants typically have a male surplus and a low nuptiality rate.

This is just putting off the evil day, which is sort of pointless.

Mind you, migrants don't necessarily have identical reproductive behavior to their source population.

Eg., Mexican-American immigrants have somewhat higher TFR's than people in Mexico -- largely because they're disproportionately small-town and rural and lower-class. Though their fertility tends to drop quickly in the US.

Alternatively, moving can increase fertility.

The 1,000,000 or so Jews and "Jews" who've moved from the ex-USSR to Israel over the past 15 years almost certainly had lower TFR's than the Russian average at home; probably something like 1.25 even in the 1990's.

In Israel they commonly add 0.75-1 child to their TFR.

In fact, Israeli TFR's have tended to rise fairly continuously for the past 60 years and more. They were down well below 2 in the 1920's and 1930's, and are around 2.4 now. That overall trend disguises a lot of internal differences, of course.

S.M. Stirling said...

"If, however, as is the case in eg the US, migrants have a slightly higher birth rate than locals (hispanics 2.8 tfr, US as a whole 2.0) then this pushes up the tfr."

-- not quite. US TFR is currently 2.09, and Hispanic TFR overall is around 2.6, so the difference is about 0.4-0.5.

This is largely a product of immigration from Mexico and Central America. Puerto Ricans and Cuban-Americans have TFR's _below_ the national average -- 1.7 and 1.6 respectively.

Mexican-Americans in particular have a somewhat higher TFR, especially among immigrants, but the native-born are now in a substantial majority.

It's getting hard to disaggregate Hispanics and non-Hispanic whites in the US since the intermarriage rate is so high now -- well over 1/3 and a majority among the locally born.

Edward Hugh said...

"This is just putting off the evil day, which is sort of pointless."

I think what you are missing here, Sterling, is what we could call the 'transitional dynamics' of the situation. This, in economic terms, is what will make the difference between having a hard or a soft landing.

A hard landing would definitely mean a global economic crash, so I think it is well worth trying to avoid this.

Basically, if you 'melt down' all the accumulated assets of the big older generations (like happened in Bulgaria in 98) you are heading straight for trouble.

So keeping the ship afloat is important while we make the transition.

Low levels of fertility are more or less inevitable, there are sound economic reasons why people only have one or two children. As to extinction, I think we'll deal with that when we get there. One thing is sure, you and I won't be around to see it :).

S.M. Stirling said...

As an aside, TFR's in the US have been rising about 0.1 per decade since the 1970's, or a little more, with a tendency for the increase to accelerate over time.

It was around 1.7 then, around 2.09 now -- up from 2.00 in 2000.

At the same time, regional disparities have also increased.

S.M. Stirling said...

"Low levels of fertility are more or less inevitable, there are sound economic reasons why people only have one or two children."

-- this is completely unsustainable.

If each successive generation is smaller, then the depencency ratio will never get any better.

The greater the fall in numbers from generation to generation, the worse things will be.

There _aren't_ any solutions to fertility substantially below replacement.

TFR's of 1 or 1.2 or so are slow-motion catastrophes, disasters like the Black Death or the Potato Famine, only less likely to concentrate the mind because of the time-frame.

Anonymous said...

You will find that in most case stories of migrants to Ireland that their ultimate goal is to raise enough money to buy a house in their own country.It is only on their return that they will start a family.I of course mean the East European migrants.

Edward Hugh said...

Hi anonymous,

"You will find that in most case stories of migrants to Ireland that their ultimate goal is to raise enough money to buy a house in their own country"

Yes, I'm sure you are right. And this is now becoming a big problem, creating a hugely inflationary housing bubble in some East European countries. The Baltics are an obvious example, but Poland and Romania cannot be far behind IMHO.

Basically, very low post 1989 fertility - which is now hitting the scale of potential labour market entrants in the youngest ages, plus large scale out migration of workers in the 20 to 40 age group mean that all these countries are now badly short of labour to build the houses everyone seems to want, and to run the economy that goes with all this activity. Hence inflation goes through the roof.

Check out all the most recent posts as we are right on top of this at the moment. Basically the whole thing has turned the EU 10 into the sub-prime equivalent of the internet bubble. This is going to be much bigger than what is currently happening in the US. It is so obviously NOT sustainable.