I agree. I think Biden's staff allowed 10M migrants to come on purpose to plug in labor shortages and help the economy. I think they were completely shocked with the backlash people had. They also thought they could blame Trump for why Republicans blocked Biden's border bill.
I think that you are assigning too much competence to the Biden administration. Also, immigration in the US is a culture war issue, and isn’t viewed as an economic issue. No one on the left or right in the US cares about the economic impact of immigration or deportation.
During COVID there was very little migration. I think that Biden’s administration didn’t expect the level of migration that the US saw in 2023, and especially not the number of asylum applications. Partisanship in the US makes people very stupid, and because liberals in the US see the desire to restrict immigration as conservative, Democrats in 2023 were in a bind. If any particular Democratic politician were to start saying that there was too much immigration, they feared that leftist donors, activists, and political staffers would make an example out of them. There was really no upside for them to do anything about immigration; it was only when it became clear that Trump would be the Republican nominee and that reducing immigration was a winning issue for him that Democrats felt any benefit in trying to curb immigration.
Dem politicians (workers in their offices that is) would tell you how their party despised work-related newcomers - if you were an immigrant and called them with a request for help or information. Then the politician in question would appear on TV/radio and tell the opposite.
However, a Dem Member of the House went on PBS and told viewers what horrible people H-4 visa holders are, and how the US should not give them what they so desperate wanted: an EAD. Those women should be put "at the back of the line" for that insolence. But she also labeled our husband "the cream of the crop".
And it was Prez Obama who brought the wait for an EAD back to six years (under certain conditions) from forever-and-a-day.
Most people who write about immigration have little to no idea about the rules, look at studies and charts. Few have lived the immigration nightmare themselves.
I keep hearing that. Yet when I immigrated to the USA I was not allowed to work, because "we have too many immigrants already, and on top of that too many illegal ones." The office of a Dem Member of Congress thus informed me that "no one asked you to come here, no one wants you here, no one needs you here." In short, my life was over.
Currently about 400,000 well-educated LEGAL non-immigrants - maybe a bit less, maybe a lot more - are not allowed to work. Mainly women, mostly from India. Economists keep going on about a "labor shortage". Then where are the work permits for H-4, O-3, etc. visa holders? (And why are their non-US born children kicked out at 21, if the US needs more people?)
Thanks for touching on this highly emotional topic. An obvious point of agreement between nativists and immigrants (at least those that are already in) should be to provide full labour rights and protections to workers, be they legal or not. Would take off downward pressure on wages, and facilitate success of migrants and their kids in their new country. But that would be counter the interests of business that have come to rely on near-slave labour to exist or keep profits high. So there is definitely a dimension of business vs the people, or rather business vs. the peoples, to the immigration issue. MAGAs and other nativist turn around this issue, with anti-immigrant and anti-establishment rage mixing together, but never ever focus on this obvious solution - tribal instincts are easily conned to scapegoat the wrong target.
Very good post. I wrote something similar a few months ago. I would say I’m slightly more optimistic about the potential to increase immigration without stimulating insurmountable backlash. As you noted, increasing immigration is the best option available to address Global North countries’ demographic problems. And while I don’t expect publics to be fully rational about that, there is not a direct relationship between quantity of immigration and scale of backlash (for one, opposition to immigration is generally higher in rural areas where people have little exposure to immigrants than urban areas with significant exposure). Evidence suggests the reaction is much more about how immigration is managed than raw numbers https://timhirschelburns.substack.com/p/the-composition-of-humanity-is-changing?utm_campaign=post&utm_medium=web
Great post. You might find the concept of “labor mobility” that Lant Pritchett discusses interesting. Including a quote from, and a link to, his related blog post below
“the question: “Who is allowed to legally reside and work in our country?” has not just two but three possible answers. One answer is “those who we (current citizens and voters) see as the future of us–those admitted on a direct (if perhaps lengthy and contingent) pathway to citizenship.” Another current answer is “those we allow as movers of distress (refugees, asylum seekers).” A third answer, which is already present in at least some form in nearly all countries is “Those who are allowed to reside and work in our country on a contractually time-limited basis.” The paper (together with an earlier companion paper focused on the politics) argues that a massive expansion of rotational labor mobility is a politically possible and administratively pragmatic.”
Very nice post. If the West is serious about immigration to fix labor shortages, one of the things I've wondered about is what the Host Country owes the Country of Origin. Is it enough to take the disaffected youth off their hands, with the potential promise of future remittances (which is not negligible, ~25% of the GDP of Nicaragua/El Salvador/Honduras)? Certainly reading about the perspective of countries like Nigeria, policymakers would like to hold on to their best and brightest.
Thank you for sharing this insightful piece! I hope African leaders leverage these deals to create better economic opportunities for Africans who are not migrating. That'd be a win-win for Europe and Africa.
I'm guessing the language in the first video is Twi. It's very melodic, but not one of my languages. I doubt I'd do very well with Swahili. It's good that Europe is bringing in young Africans. I hope they prosper. I forget the date mentioned in something I read, that by that time every fourth person in the world will be African. Of course, we're all Africans, anyway. Good post, Yaw.
This is a thoughtful analysis with a lot of demographic data to make its point. I suspect Biden’s open border policy may have been a back door way to address the same demographic pension challenge in the U.S. Chile solved this problem by reforming its pension/social security system starting in the 1980’s. Chile’s pension system is now fully funded, worker owned and doesn’t depend on demographics.
1) exports as a percentage of gdp doesnt seem to be a limiting factor. Israel's exports as a % of gdp is ~30%. Luxembourg, Netherlands, Belgium, and many other european countries are way more export oriented than Israel so I dont think exports is a factor.
Also america has higher tfr than most of Europe and america not an export oriented economy at all
2) completely agree 👍
3) they didnt reverse demogrpahic decline they just slowed the decline. It went from decreasing to hovering around 3. Some of that is due to the haredi community. But yes they have free IVF
Just one thing - about increasing TFR - High impact intervention hasn't been tried. Pension systems are orders of magnitudes bigger than anything that has been proposed to support birth rates, kids and families.
It is more politically prudent to support voters then future voters, I guess.
So are you saying pensions should be forced to buy government bonds to support big enough government borrowing to basically do turbo charged Hungarian family spending?
I am saying if Governments are serious about tackling birth rate declines, not serious attempt has been made. The amount of resources where very limited compared to the task.
Your proposal of having Pensions buying government bonds could be some kind of financing mechanism, but of course in France and Germany Pensions are pay-as-you-go and don't invest at all, they are just taxes on current working population to support retirees.
Anyway, in real terms, any care-taker of an elderly is one less care-taker of Children, and societies have to prioritize.
Hungary is the most aggressive case of trying increasing TFR on earth. What is Hungary doing insufficiently? What else should be done?
I could have mentioned russia's spending attempts, poland's spending attempts, Serbia's attempts, and other countries as well, but all these countries still have lower tfr than America. It appears that there are diminishing returns and that many young, educafsd women in industrialized economies have other desires besides having children - like self actualization, careers, travel, and individual freedom.
Israel's high fertility comes from its excessive paranoia of its neighbors, the haredi druze,and historical memory that they were almost wiped out. The culture is primed to care about demographics and when I was there my israeli friends causally talked about israeli to arab birth rates.
This shows that fertility has a post-materialist dimensions.
1). Below average family spending wouldn’t be a problem for an export-oriented economy. It’s only a problem if you’re relying on your domestic consumers buying ever more stuff to grow your economy. Maybe “me-me-me”, self-oriented consumerism is one cause of low fertility.
2). I agree that Israel is felt to be a cause in a way that, say, Belgium just isn’t. And it would be hard for the Belgian government to imbue Belgians with a patriotic urge to procreate - to develop a kind of Belgo-Zionism.
3). On the other hand, Israel proves that demographic decline CAN be reversed if you’re determined enough, and if you’ve correctly analysed the causes of low fertility. All Israeli governments understand that, for political reasons, the Jewish state cannot grow its population by increasing the number of non-Jews. That option is politically off the table. My understanding is that they’re super generous with IVF treatments for older women of child-bearing age. And, even though land is scarce, they’re somehow able to make sure there are enough homes available at a reasonable price for three-children families. And, even though not all Jews are religious, the high fertility of religious Jews rubs off on non religious Jews, at least somewhat.
4). I agree 100% about “post materialist dimensions”. Religiosity definitely seems to correlate with higher fertility, for instance.
You need something on the order of magnitude of lost wages.
When you have something on the order of allowance of Median wage per month per Kid for 10 years, at least.
Alternatively, you could think about it like that - An average person generates a lot of value. He captures just a small percentage of it - a lot goes to the Government, and to his employer, and various people who sell him stuff (and they pay taxes as well). Encouraging more people is good business, an investment in the future.
It looks to me like Orban's reforms were stormingly successful (as were Russia's while those lasted), particularly as the effect on the age ranges that contribute to the TFR will not be uniform so it's likely to continue to grow with time. Progress was interrupted by the 10% fertility crash that just happened to affect most high-income countries in 2022 and which most low-income countries mercifully swerved, at least for now. And measures like Orban's are a more sustainable way to address the issue.
I won't touch on the racial/ethnic and cultural backlash to migration. That's way too controversial.
I will stick purely to economics.
People are upset because they feel lied to by policymakers about the benefits of immigration. Economists and politicians claim immigration is an economic benefit. Yet European countries have accepted huge numbers of asylum seekers who receive asylum stipends that make them net drains not net gains: https://docs.iza.org/dp17569.pdf
"Asylum as backdoor immigration" has been a disaster for the pro-immigration side and done nothing but fuel Great Replacement believers. Look no further than this article "Thousands of Afghans were moved to UK in secret scheme": https://www.bbc.com/news/articles/cvg8zy78787o
Furthermore, if immigration is to be used as an economic gain "chain migration" should be heavily restricted. Canada allows sponsoring of parents and grandparents (!) https://www.canadavisa.com/parent-and-grandparent-sponsorship.html. Your average 25 year old worker bringing in his 45 year old parents and 70 year old grandparents is making the dependency ratio worse, not better.
Yes, the issue is more complicated as you said. In order to keep the Welfare State you need high productivity, and we lost it. More population, specially dedicate it to bad-paid jobs or to black-market jobs, will not compensate that loss of productivity. It could work as an increase of the demographical pressure diminishing the average level of live. With the issue of social services to inmigrants, yes, this cause anger in people: "¿I am empovering and you don't give social services and a guy come and receive it?" (this is the thought in some peoples mind). This high costs for average people are specially obvious in renting issues in the cities.
I think that the calls to inmigration as a solution (we need some inmigration, but maybe not in this numbers and of course not with the current moldel, another issue) are based on the thinking that this Welfare State could be maintanied in the future if we make things right. If we look history, some problems have been increased by intensifying reproduction or number of people; it is false that diminishing population it is always wrong for a country (sometimes it is, but others is clever to do it). I think, and we see it in many Western countries, that we reach the top of the Welfare State and we are already going a bit down, because our productivity has go down and the past and present demographic stills growing up. It is pure maths, also.
Very good article for Yaw, as always. Another thing is for african people, of course. And I am sure that this migration benefits them, but maybe shocks (in short term, definitely) with their european homologous.
I agree. I think Biden's staff allowed 10M migrants to come on purpose to plug in labor shortages and help the economy. I think they were completely shocked with the backlash people had. They also thought they could blame Trump for why Republicans blocked Biden's border bill.
I think that you are assigning too much competence to the Biden administration. Also, immigration in the US is a culture war issue, and isn’t viewed as an economic issue. No one on the left or right in the US cares about the economic impact of immigration or deportation.
During COVID there was very little migration. I think that Biden’s administration didn’t expect the level of migration that the US saw in 2023, and especially not the number of asylum applications. Partisanship in the US makes people very stupid, and because liberals in the US see the desire to restrict immigration as conservative, Democrats in 2023 were in a bind. If any particular Democratic politician were to start saying that there was too much immigration, they feared that leftist donors, activists, and political staffers would make an example out of them. There was really no upside for them to do anything about immigration; it was only when it became clear that Trump would be the Republican nominee and that reducing immigration was a winning issue for him that Democrats felt any benefit in trying to curb immigration.
Gold comment right here ^
Dem politicians (workers in their offices that is) would tell you how their party despised work-related newcomers - if you were an immigrant and called them with a request for help or information. Then the politician in question would appear on TV/radio and tell the opposite.
However, a Dem Member of the House went on PBS and told viewers what horrible people H-4 visa holders are, and how the US should not give them what they so desperate wanted: an EAD. Those women should be put "at the back of the line" for that insolence. But she also labeled our husband "the cream of the crop".
And it was Prez Obama who brought the wait for an EAD back to six years (under certain conditions) from forever-and-a-day.
Most people who write about immigration have little to no idea about the rules, look at studies and charts. Few have lived the immigration nightmare themselves.
I keep hearing that. Yet when I immigrated to the USA I was not allowed to work, because "we have too many immigrants already, and on top of that too many illegal ones." The office of a Dem Member of Congress thus informed me that "no one asked you to come here, no one wants you here, no one needs you here." In short, my life was over.
Currently about 400,000 well-educated LEGAL non-immigrants - maybe a bit less, maybe a lot more - are not allowed to work. Mainly women, mostly from India. Economists keep going on about a "labor shortage". Then where are the work permits for H-4, O-3, etc. visa holders? (And why are their non-US born children kicked out at 21, if the US needs more people?)
Someone please explain.
Thanks for touching on this highly emotional topic. An obvious point of agreement between nativists and immigrants (at least those that are already in) should be to provide full labour rights and protections to workers, be they legal or not. Would take off downward pressure on wages, and facilitate success of migrants and their kids in their new country. But that would be counter the interests of business that have come to rely on near-slave labour to exist or keep profits high. So there is definitely a dimension of business vs the people, or rather business vs. the peoples, to the immigration issue. MAGAs and other nativist turn around this issue, with anti-immigrant and anti-establishment rage mixing together, but never ever focus on this obvious solution - tribal instincts are easily conned to scapegoat the wrong target.
Thanks for a great article. Very informative.
Very good post. I wrote something similar a few months ago. I would say I’m slightly more optimistic about the potential to increase immigration without stimulating insurmountable backlash. As you noted, increasing immigration is the best option available to address Global North countries’ demographic problems. And while I don’t expect publics to be fully rational about that, there is not a direct relationship between quantity of immigration and scale of backlash (for one, opposition to immigration is generally higher in rural areas where people have little exposure to immigrants than urban areas with significant exposure). Evidence suggests the reaction is much more about how immigration is managed than raw numbers https://timhirschelburns.substack.com/p/the-composition-of-humanity-is-changing?utm_campaign=post&utm_medium=web
Great article. Very clear and balanced.
Great post. You might find the concept of “labor mobility” that Lant Pritchett discusses interesting. Including a quote from, and a link to, his related blog post below
“the question: “Who is allowed to legally reside and work in our country?” has not just two but three possible answers. One answer is “those who we (current citizens and voters) see as the future of us–those admitted on a direct (if perhaps lengthy and contingent) pathway to citizenship.” Another current answer is “those we allow as movers of distress (refugees, asylum seekers).” A third answer, which is already present in at least some form in nearly all countries is “Those who are allowed to reside and work in our country on a contractually time-limited basis.” The paper (together with an earlier companion paper focused on the politics) argues that a massive expansion of rotational labor mobility is a politically possible and administratively pragmatic.”
https://lantpritchett.org/immigration-is-essential-and-impossible/
Very nice post. If the West is serious about immigration to fix labor shortages, one of the things I've wondered about is what the Host Country owes the Country of Origin. Is it enough to take the disaffected youth off their hands, with the potential promise of future remittances (which is not negligible, ~25% of the GDP of Nicaragua/El Salvador/Honduras)? Certainly reading about the perspective of countries like Nigeria, policymakers would like to hold on to their best and brightest.
Thank you for sharing this insightful piece! I hope African leaders leverage these deals to create better economic opportunities for Africans who are not migrating. That'd be a win-win for Europe and Africa.
I'm guessing the language in the first video is Twi. It's very melodic, but not one of my languages. I doubt I'd do very well with Swahili. It's good that Europe is bringing in young Africans. I hope they prosper. I forget the date mentioned in something I read, that by that time every fourth person in the world will be African. Of course, we're all Africans, anyway. Good post, Yaw.
It is Twi! And thanks Jill!
This is a thoughtful analysis with a lot of demographic data to make its point. I suspect Biden’s open border policy may have been a back door way to address the same demographic pension challenge in the U.S. Chile solved this problem by reforming its pension/social security system starting in the 1980’s. Chile’s pension system is now fully funded, worker owned and doesn’t depend on demographics.
1) exports as a percentage of gdp doesnt seem to be a limiting factor. Israel's exports as a % of gdp is ~30%. Luxembourg, Netherlands, Belgium, and many other european countries are way more export oriented than Israel so I dont think exports is a factor.
https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?locations=IL-LU-BE-NL
Also america has higher tfr than most of Europe and america not an export oriented economy at all
2) completely agree 👍
3) they didnt reverse demogrpahic decline they just slowed the decline. It went from decreasing to hovering around 3. Some of that is due to the haredi community. But yes they have free IVF
https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=IL
4) yep post/non materialistic conditions matter, more than many people want to admit.
Nice Writeup.
Just one thing - about increasing TFR - High impact intervention hasn't been tried. Pension systems are orders of magnitudes bigger than anything that has been proposed to support birth rates, kids and families.
It is more politically prudent to support voters then future voters, I guess.
So are you saying pensions should be forced to buy government bonds to support big enough government borrowing to basically do turbo charged Hungarian family spending?
I am saying if Governments are serious about tackling birth rate declines, not serious attempt has been made. The amount of resources where very limited compared to the task.
Your proposal of having Pensions buying government bonds could be some kind of financing mechanism, but of course in France and Germany Pensions are pay-as-you-go and don't invest at all, they are just taxes on current working population to support retirees.
Anyway, in real terms, any care-taker of an elderly is one less care-taker of Children, and societies have to prioritize.
Hungary is the most aggressive case of trying increasing TFR on earth. What is Hungary doing insufficiently? What else should be done?
I could have mentioned russia's spending attempts, poland's spending attempts, Serbia's attempts, and other countries as well, but all these countries still have lower tfr than America. It appears that there are diminishing returns and that many young, educafsd women in industrialized economies have other desires besides having children - like self actualization, careers, travel, and individual freedom.
What about Israel?
Israel has above replacement fertility but they have below average family spending in the OECD.
https://www.oecd.org/en/data/indicators/family-benefits-public-spending.html?utm_source=chatgpt.com&oecdcontrol-9202e3bf52-var3=2021&oecdcontrol-89cf33ff83-var1=ISR%7COECD%7CEU%7CAUS%7CAUT%7CHUN
Israel's high fertility comes from its excessive paranoia of its neighbors, the haredi druze,and historical memory that they were almost wiped out. The culture is primed to care about demographics and when I was there my israeli friends causally talked about israeli to arab birth rates.
This shows that fertility has a post-materialist dimensions.
1). Below average family spending wouldn’t be a problem for an export-oriented economy. It’s only a problem if you’re relying on your domestic consumers buying ever more stuff to grow your economy. Maybe “me-me-me”, self-oriented consumerism is one cause of low fertility.
2). I agree that Israel is felt to be a cause in a way that, say, Belgium just isn’t. And it would be hard for the Belgian government to imbue Belgians with a patriotic urge to procreate - to develop a kind of Belgo-Zionism.
3). On the other hand, Israel proves that demographic decline CAN be reversed if you’re determined enough, and if you’ve correctly analysed the causes of low fertility. All Israeli governments understand that, for political reasons, the Jewish state cannot grow its population by increasing the number of non-Jews. That option is politically off the table. My understanding is that they’re super generous with IVF treatments for older women of child-bearing age. And, even though land is scarce, they’re somehow able to make sure there are enough homes available at a reasonable price for three-children families. And, even though not all Jews are religious, the high fertility of religious Jews rubs off on non religious Jews, at least somewhat.
4). I agree 100% about “post materialist dimensions”. Religiosity definitely seems to correlate with higher fertility, for instance.
All those attempts are small.
You need something on the order of magnitude of lost wages.
When you have something on the order of allowance of Median wage per month per Kid for 10 years, at least.
Alternatively, you could think about it like that - An average person generates a lot of value. He captures just a small percentage of it - a lot goes to the Government, and to his employer, and various people who sell him stuff (and they pay taxes as well). Encouraging more people is good business, an investment in the future.
I agree maybe an order of magnitude is needed. Sadly the biggest constraints is if bond markets are willing to finance the spending.
I don't think bond markets are the constraints.
Would Germany or France fail to pay pensions because of bond markets?
Will they fail to wage a war?
It is a political decision, and the current political frame doesn't favour it.
It looks to me like Orban's reforms were stormingly successful (as were Russia's while those lasted), particularly as the effect on the age ranges that contribute to the TFR will not be uniform so it's likely to continue to grow with time. Progress was interrupted by the 10% fertility crash that just happened to affect most high-income countries in 2022 and which most low-income countries mercifully swerved, at least for now. And measures like Orban's are a more sustainable way to address the issue.
We'll see in 10 years how the progress comes along.
Producticity per hour worked did go up steadily in the EU during the two decades until the Covid pandemic, at roughly 1% per year.
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Productivity_trends_using_key_national_accounts_indicators
It's possible for attempts to get back to that trend to be successful.
I won't touch on the racial/ethnic and cultural backlash to migration. That's way too controversial.
I will stick purely to economics.
People are upset because they feel lied to by policymakers about the benefits of immigration. Economists and politicians claim immigration is an economic benefit. Yet European countries have accepted huge numbers of asylum seekers who receive asylum stipends that make them net drains not net gains: https://docs.iza.org/dp17569.pdf
If a European welfare state accepts a migrant who does not work but is allowed to collect welfare, that makes the host country's demographic problems WORSE not better. Some asylum seekers have been caught trying to welfare scam: https://www.thetimes.com/uk/politics/article/uk-asylum-seekers-caught-double-benefits-68krzd9cj
"Asylum as backdoor immigration" has been a disaster for the pro-immigration side and done nothing but fuel Great Replacement believers. Look no further than this article "Thousands of Afghans were moved to UK in secret scheme": https://www.bbc.com/news/articles/cvg8zy78787o
Furthermore, if immigration is to be used as an economic gain "chain migration" should be heavily restricted. Canada allows sponsoring of parents and grandparents (!) https://www.canadavisa.com/parent-and-grandparent-sponsorship.html. Your average 25 year old worker bringing in his 45 year old parents and 70 year old grandparents is making the dependency ratio worse, not better.
Hi, Tengri.
Yes, the issue is more complicated as you said. In order to keep the Welfare State you need high productivity, and we lost it. More population, specially dedicate it to bad-paid jobs or to black-market jobs, will not compensate that loss of productivity. It could work as an increase of the demographical pressure diminishing the average level of live. With the issue of social services to inmigrants, yes, this cause anger in people: "¿I am empovering and you don't give social services and a guy come and receive it?" (this is the thought in some peoples mind). This high costs for average people are specially obvious in renting issues in the cities.
I think that the calls to inmigration as a solution (we need some inmigration, but maybe not in this numbers and of course not with the current moldel, another issue) are based on the thinking that this Welfare State could be maintanied in the future if we make things right. If we look history, some problems have been increased by intensifying reproduction or number of people; it is false that diminishing population it is always wrong for a country (sometimes it is, but others is clever to do it). I think, and we see it in many Western countries, that we reach the top of the Welfare State and we are already going a bit down, because our productivity has go down and the past and present demographic stills growing up. It is pure maths, also.
Very good article for Yaw, as always. Another thing is for african people, of course. And I am sure that this migration benefits them, but maybe shocks (in short term, definitely) with their european homologous.