Transcript The Crisis: Preliminary Thoughts

Economic crises and migration:
Learning from the past and the present
L Alan Winters
Chief Economist, DFID
and
Professor of Economics, University of Sussex
with Tim Green, DFID
Outline
•
•
•
•
•
The current crisis
The nineteenth century
The twentieth century
Some hypotheses
Preliminary evidence from the
twenty-first century
Royal Economic Society
Page 2
Collapsing Trade
World Trade (monthly US$ billion)
March 1250
2007
April
February
1000
2008
750
January
2009
May
500
250
June
1250 1000
750
500
250
250
December
250
500
750
July
500
November
1000 1250
750
1000
October
1250
August
September
Royal Economic Society
Sources: IMF staff
estimates.
Page 3
Outlook: Trade
World Trade
Advanced
Current Forecast
(January 2010)
2008 2009 2010 2011
2.8 -12.3 5.8
6.3
Imports
0.5 -12.2 5.5
5.5
Em & Dev’ing
8.9
Advanced
Em & Dev’ing
1.8
4.4
-13.5 6.5
Exports
-12.1 5.9
-11.7 5.4
Diff. April
2008
2008
-2.8
2009
-18.1
-2.6
-15.9
7.7
-2.9
-24.2
5.6
7.8
-2.7
-2.7
-16.3
-20.4
World Trade % growth, WEO January 2010
Royal Economic Society
Page 4
Commodity Prices
Royal Economic Society
Page 5
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
Royal Economic Society
Page 6
Projections: GDP Growth
World
Advanced
SSA
Cent & E Eur
Dev’ing Asia
W Hemi
2008
3.0
0.5
5.6
3.1
7.9
4.2
Current Forecast
(January 2010)
2009 2010
-0.8
3.9
-3.2
2.1
1.6
4.3
-4.3
2.0
6.5
8.4
-2.3
3.7
Diff. April
2008
2011
4.3
2.4
5.5
3.7
8.4
3.8
2008
-0.7
-0.8
-1.0
-1.3
-0.3
-0.2
2009
-4.6
-4.5
-5.1
-8.6
-1.9
-5.9
Real GDP Growth; WEO January 2010
Royal Economic Society
Page 7
Real GDP 1979 = 1.0
Advanced and (Emerging and Developing) Economies
6
5
4
crisis
no crisis
3
crisis
no crisis
2
1
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
0
Royal Economic Society
Page 8
Outline
•
•
•
•
•
The crisis
The nineteenth century
The twentieth century
Some hypotheses
Preliminary evidence from the
twenty-first century
Royal Economic Society
Page 9
Population of Ireland, 1791-1901
O’Rourke,
1995
9
1845
8
All Ireland
26 counties
millions
7
6
5
4
3
1791
1811
1831
1851
Royal Economic Society
1871
1891
Page 10
Emigration to USA and GDP
Growth, UK 1831-1913,
3
2
1
1911
1906
1901
1896
1891
1886
1881
1876
1871
1866
1861
1856
1851
1846
1841
1836
1831
0
-1
-2
-3
emig
gdp grth
Royal Economic Society
Page 11
Emigration of Citizens and
Growth, UK 1853-1913
4
3
2
1
18
53
18
57
18
61
18
65
18
69
18
73
18
77
18
81
18
85
18
89
18
93
18
97
19
01
19
05
19
09
19
13
0
-1
-2
-3
-4
emig
Royal Economic Society
gdp grth
Page 12
Emigration of Citizens and
Growth, UK 1853-1913
3.5
3
2.5
2
Emigration
1.5
1
0.5
0
-4
-3
-2
-1
-0.5
0
1
2
3
-1
-1.5
-2
GDP growth
Royal Economic Society
Page 13
Emigration of Citizens (lagged)
and Growth, UK 1853-1913
3.5
3
2.5
Emigration lagged
2
1.5
1
0.5
0
-4
-3
-2
-1
-0.5
0
1
2
3
-1
-1.5
-2
GDP growth
Royal Economic Society
Page 14
Emigration to USA and US GDP
growth
4
3
2
1
18
71
18
73
18
75
18
77
18
79
18
81
18
83
18
85
18
87
18
89
18
91
18
93
18
95
18
97
18
99
19
01
19
03
19
05
19
07
19
09
19
11
19
13
0
-1
-2
-3
GDP
UK citizens
Neth
Royal Economic Society
Sweden
France
Germany
Page 15
De-trended emigration rates
Hatton and
Williamson,
2007
Royal Economic Society
Page 16
De-trended emigration rates
Hatton and
Williamson,
2007
Royal Economic Society
Page 17
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.
Royal Economic Society
Page 18
Outline
•
•
•
•
•
The crisis
The nineteenth century
The twentieth century
Some hypotheses
Preliminary evidence from the
twenty-first century
Royal Economic Society
Page 19
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.
Royal Economic Society
Page 20
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
Royal Economic Society
Page 21
The Asian Crisis, 1997-8
• Limited impact on migration within East
Asia,
• Some tightening of policy,
• Business lobbies against restrictions
Royal Economic Society
Page 22
Outline
•
•
•
•
•
The crisis
The nineteenth century
The twentieth century
Some hypotheses
Preliminary evidence from the
twenty-first century
Royal Economic Society
Page 23
GDP Growth, Now and Then
1831-1913, UK
1980-2013, Advanced
6
6
4
4
2
2
0
0
-2
19
80
19
85
19
90
19
95
20
00
20
05
20
10
8
18
31
18
37
18
43
18
49
18
55
18
61
18
67
18
73
18
79
18
85
18
91
18
97
19
03
19
09
8
-2
-4
-4
-6
-6
Royal Economic Society
Page 24
GDP Growth, Now and Then
1831-1913, UK
1980-2013, Em. & Dev.
8
6
4
2
18
31
18
37
18
43
18
49
18
55
18
61
18
67
18
73
18
79
18
85
18
91
18
97
19
03
19
09
0
-2
-4
-6
Royal Economic Society
Page 25
Difference (PPP) Hi vs. Lo & Mid
(real GDP pc, calibrated to PPP difference in 2000, WB)
29000
27000
25000
23000
21000
19000
20
13
20
10
20
07
20
04
20
01
19
98
19
95
19
92
19
89
19
86
19
83
19
80
17000
difference
Royal Economic Society
Page 26
Hypotheses (Destination countries)
1.
2.
3.
4.
5.
Inflows fall with recession.
Returns may increase somewhat, but
less than changes in inflows
Long-term structural effects
Migrants affected more severely than
natives
Tighten immigration policies during
crises
Royal Economic Society
Page 27
1. Inflows
• Net immigration to the US, down from 1
million p.a. in 2000-6 to 500,000 20067. 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.
Royal Economic Society
Page 28
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.
Royal Economic Society
Page 29
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.
Royal Economic Society
Page 30
3. Long-term structural effects
• Too early to tell
• Declines in construction and hospitality
are cyclical
• Industrial output…?
Royal Economic Society
Page 31
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.
Royal Economic Society
Page 32
Change in Unemployment 2008 Q3 to 2009 Q3
10.0
Source:
OECD
International
Migration
Outlook,
2010,
Foreign born
8.0
6.0
4.0
forthcoming
2.0
0.0
0.0
2.0
4.0
6.0
8.0
10.0
Native
Royal Economic Society
Page 33
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%
Royal Economic Society
Page 34
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)
Royal Economic Society
Page 35
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
Royal Economic Society
Page 36
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?
Royal Economic Society
Page 37
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 crisisinduced backlash - yet.
• Quite like experience predicts
Royal Economic Society
Page 38
THANK YOU
Royal Economic Society
Page 39