economic crises and migration: learning from the past and the present l alan winters chief...

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

Royal Economic Society

Outline

• The current crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the

twenty-first century


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.


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


Commodity Prices


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


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


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


Outline

• The crisis• The nineteenth century• The twentieth century• Some hypotheses• Preliminary evidence from the



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


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


Emigration of Citizens and Growth, UK 1853-1913

-4

-3

-2

-1

0

1

2

3

4

emig gdp grth


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


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


Emigration to USA and US GDP growth

-3

-2

-1

0

1

2

3

4

GDP UK citizens Neth Sweden France Germany


Hatton and Williamson, 2007

De-trended emigration rates


De-trended emigration rates

Hatton and Williamson, 2007


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.


Outline




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.


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


The Asian Crisis, 1997-8

• Limited impact on migration within East Asia,

• Some tightening of policy,• Business lobbies against restrictions


Outline




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


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


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


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


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.


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.


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.


3. Long-term structural effects

• Too early to tell• Declines in construction and hospitality

are cyclical• Industrial output…?


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.


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


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%


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)


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


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?


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


THANK YOU

economic crises and migration: learning from the past and the present l alan winters chief...

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