economic crises and migration: learning from the past and the present l alan winters chief...
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Economic crises and migration: Learning from the past and the
presentL Alan Winters
Chief Economist, DFIDand
Professor of Economics, University of Sussex
with Tim Green, DFID
Page 2Royal Economic Society
Outline
• The current crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the
twenty-first century
Page 3Royal Economic Society
Collapsing TradeWorld Trade (monthly US$ billion)
1250
1000
750
500
250
250
500
750
1000
1250
1250 1000 750 500 250 250 500 750 1000 1250
2007
2008
2009
January
February
March
April
May
June
July
August
SeptemberOctober
November
December
Sources: IMF staff estimates.
Page 4Royal Economic Society
Current Forecast
(January 2010)
Diff. April 2008
2008 2009 2010 2011 2008 2009
World Trade 2.8 -12.3 5.8 6.3 -2.8 -18.1
Imports
Advanced 0.5 -12.2 5.5 5.5 -2.6 -15.9
Em & Dev’ing 8.9 -13.5 6.5 7.7 -2.9 -24.2
Exports
Advanced 1.8 -12.1 5.9 5.6 -2.7 -16.3
Em & Dev’ing 4.4 -11.7 5.4 7.8 -2.7 -20.4World Trade % growth, WEO January 2010
Outlook: Trade
Page 5Royal Economic Society
Commodity Prices
Page 6Royal Economic Society
External Financing Projections(EMEs, $ billion, IIF January 2010)
2008 2009e 2010f 2011f
Current Account 585.1 389.8 374.1 358.0
Private inflows, net 667.1 435.2 721.6 797.9
Private creditors, net 253.7 -27.6 159.2 200.6
Equity investment,net 219.1 139.6 235.8 260.5
Official inflows, net 57.2 68.0 55.8 35.3
Increase in reserves 448.5 587.1 606.3 583.6
Page 7Royal Economic Society
Projections: GDP GrowthCurrent Forecast
(January 2010)
Diff. April 2008
2008 2009 2010 2011 2008 2009
World 3.0 -0.8 3.9 4.3 -0.7 -4.6
Advanced 0.5 -3.2 2.1 2.4 -0.8 -4.5
SSA 5.6 1.6 4.3 5.5 -1.0 -5.1
Cent & E Eur 3.1 -4.3 2.0 3.7 -1.3 -8.6
Dev’ing Asia 7.9 6.5 8.4 8.4 -0.3 -1.9
W Hemi 4.2 -2.3 3.7 3.8 -0.2 -5.9
Real GDP Growth; WEO January 2010
Page 8Royal Economic Society
Real GDP 1979 = 1.0 Advanced and (Emerging and Developing) Economies
0
1
2
3
4
5
6
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
crisis
no crisis
crisis
no crisis
Page 9Royal Economic Society
Outline
• The crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the
twenty-first century
Page 10Royal Economic Society
Population of Ireland, 1791-1901
3
4
5
6
7
8
9
1791 1811 1831 1851 1871 1891
mill
ion
s
All Ireland
26 counties
O’Rourke, 1995
1845
Page 11Royal Economic Society
Emigration to USA and GDP Growth, UK 1831-1913,
-3
-2
-1
0
1
2
31831
1836
1841
1846
1851
1856
1861
1866
1871
1876
1881
1886
1891
1896
1901
1906
1911
emig gdp grth
Page 12Royal Economic Society
Emigration of Citizens and Growth, UK 1853-1913
-4
-3
-2
-1
0
1
2
3
4
emig gdp grth
Page 13Royal Economic Society
Emigration of Citizens and Growth, UK 1853-1913
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
-4 -3 -2 -1 0 1 2 3
GDP growth
Em
igra
tio
n
Page 14Royal Economic Society
Emigration of Citizens (lagged) and Growth, UK 1853-1913
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
-4 -3 -2 -1 0 1 2 3
GDP growth
Em
igra
tio
n l
agg
ed
Page 15Royal Economic Society
Emigration to USA and US GDP growth
-3
-2
-1
0
1
2
3
4
GDP UK citizens Neth Sweden France Germany
Page 16Royal Economic Society
Hatton and Williamson, 2007
De-trended emigration rates
Page 17Royal Economic Society
De-trended emigration rates
Hatton and Williamson, 2007
Page 18Royal Economic Society
The Evolution of Policy
• Nineteenth century backlash emerged slowly
• Relative unskilled wages are main factor behind tightening
• Independent effect of numbers limited• Cycle affects timing not fundamental
direction.
Page 19Royal Economic Society
Outline
• The crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the
twenty-first century
Page 20Royal Economic Society
The 1930s (USA)
• Policy tightening over previous 40 years• Big falls in immigration to the US (5%
of quotas filled in 1933)• significant returns to Mexico. • Stocks of immigrants fall.
Page 21Royal Economic Society
Early 1970s (W. Europe)
• Significant falls in inflows to some European countries (from 869,000 in 1973 to 423,000 in 1977 for West Germany)
• Policy tightens – Germany, France (ban), • few returns, stocks return to pre-crisis
levels in a few years.• Guest-worker schemes end.• Immigration to Gulf starts seriously
Page 22Royal Economic Society
The Asian Crisis, 1997-8
• Limited impact on migration within East Asia,
• Some tightening of policy,• Business lobbies against restrictions
Page 23Royal Economic Society
Outline
• The crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the
twenty-first century
Page 24Royal Economic Society
GDP Growth, Now and Then
-6
-4
-2
0
2
4
6
8
-6
-4
-2
0
2
4
6
8
1980
1985
1990
1995
2000
2005
2010
1831-1913, UK 1980-2013, Advanced
Page 25Royal Economic Society
GDP Growth, Now and Then
-6
-4
-2
0
2
4
6
8
1831-1913, UK 1980-2013, Em. & Dev.
-6
-4
-2
0
2
4
6
8
Page 26Royal Economic Society
Difference (PPP) Hi vs. Lo & Mid (real GDP pc, calibrated to PPP difference in 2000, WB)
17000
19000
21000
23000
25000
27000
2900019
80
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
difference
Page 27Royal Economic Society
Hypotheses (Destination countries)
1. Inflows fall with recession.
2. Returns may increase somewhat, but less than changes in inflows
3. Long-term structural effects
4. Migrants affected more severely than natives
5. Tighten immigration policies during crises
Page 28Royal Economic Society
1. Inflows
• Net immigration to the US, down from 1 million p.a. in 2000-6 to 500,000 2006-7. Emigration from Mexico down from 369,000 in Q2’06 to 144,000 in Q2’09
• A8 emigration to the UK, down 54% between Q1’08 and Q1’09 (since stabilised), down 57% to Ireland.
• Partly linked to concentration in construction sector.
Page 29Royal Economic Society
1. Inflows cont.
• Declining outflows from Bangladesh – down by about 40% yr-on-yr.
• But not all flows are shrinking – little change in care workers leaving Indonesia, or Philippines emigrating to the Gulf.
Page 30Royal Economic Society
2. Returns
• Little evidence of large-scale returns• Possible exceptions, e.g. Poles leaving
the UK, Central Asians leaving Russia.• Concern amongst governments,
Uzebekistan, Philippines, Nepal establishing support programmes for returnees.
Page 31Royal Economic Society
3. Long-term structural effects
• Too early to tell• Declines in construction and hospitality
are cyclical• Industrial output…?
Page 32Royal Economic Society
4. Migrants affected worse than natives
• Some evidence of shift to part-time work (US, Thailand)
• Concentration in sectors such as construction only partly explains high migrant job losses in the US (OECD)
• Differences in education may also be a factor in US (MPI)
• Impact on unemployment appears worse for foreign-born in OECD countries.
Page 33Royal Economic Society
Change in Unemployment 2008 Q3 to 2009 Q3
0.0
2.0
4.0
6.0
8.0
10.0
0.0 2.0 4.0 6.0 8.0 10.0
Native
Fo
reig
n b
orn
Source: OECD International Migration Outlook, 2010,
forthcoming
Page 34Royal Economic Society
5. Tightened immigration policies
• Some tightening of policies for both permanent and temporary migration • Russia halves work permits from 4 to 2
million • UK tighter points system
• Search period• Tenure limits for MNC transfers• Salary limit for ‘skilled’ up by
17.5%
Page 35Royal Economic Society
5. Tightened immigration policies cont.
• US stimulus beneficiaries constrained (but excess demand, so may not affect numbers)
• Australia skilled quotas cut by 14%• Italy non-seasonal quota abolished
(from 150,000), jail for housing illegal migrants
• Spain non-seasonal quota cut 15,000 to 900 (Contingente)
Page 36Royal Economic Society
5. Tightened immigration policies cont.
• Malaysia • cancelled 55,000 Bangladeshi visas• Calls to lay-off foreign workers
• South Korea announced closure of Employment Permit System
• Thailand will not re-register foreign workers
• Kazakhstan moratorium on unskilled entry
Page 37Royal Economic Society
5. Tightened immigration policies - overview
• Not universal however (Canada), and remains to be seen how effective measures turn out to be.
• Resistance from business • Context of gradual tightening anyway –
i.e consistent with policy being essentially long-run?
Page 38Royal Economic Society
Summary
• It’s very soon to tell• Numbers have fallen• Returns – only minor evidence• Migrant burdens: some evidence of
excess, but not overwhelming • Policy – no real evidence of crisis-
induced backlash - yet.• Quite like experience predicts
Page 39Royal Economic Society
THANK YOU
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