Monday, 23 July 2018

Population ageing can't be balanced by migration

A headline in The Conversation today attracted my attention for all the wrong reasons:
Migration helps balance our ageing population – we don’t need a moratorium
I'm not sure if the researcher who wrote the article (Liz Allen of Australian National University) should be held responsible for the headline, but the data in the article doesn't support the headline, and neither does years of research in Australia and New Zealand, including by Natalie Jackson and myself.

To illustrate, one of the key figures from the article is reproduced below (you can find the actual data in The Conversation article). The vertical axis shows the 'dependency ratio' (the number of people aged 0-14 years old or 65 years and over, for every 100 people of working age (15-64 years)). The different coloured lines track different population projections for the Australian population, based on different assumptions about annual net international migration (between zero migration - the red line, and 280,000 net international migration per year - the grey line). Notice that the dependency ratio increases regardless of migration scenario. Irrespective of the projected level of net international migration in Australia, the dependency ratio increases. While the zero net migration scenario is the worst, there is clearly no 'balancing' of population ageing by international migration.

The reason for this is simple. International migrants may be younger (on average) than the domestic population, but migrants get older just like the domestic population does. In order to offset the ageing of the domestic population plus the ageing of the newly arrived migrants, you would need to increase migration even further. In fact, you would need accelerating net international migration in order to offset population ageing. That simply isn't realistic for mathematical reasons (you'd soon run out of young people internationally who wanted to move to your country), if not for political reasons.

This isn't a new insight for Australia or New Zealand. Rebecca Kippen and Peter McDonald wrote a number of papers in the late 1990s and early 2000s on this issue, based on Australian data (see here and here and here). Natalie Jackson and I had a paper published last year in the Journal of Population Ageing (ungated earlier version here), which included a similar analysis for New Zealand. In that paper, we wrote that:
...extremely high migration levels would have only minimal impact on the proportion of the population aged 65 years and over in 2068. Zero net migration (Scenario 8) would see around 28.1% aged 65 years and over in 2068, while net migration of 150,000 per year would reduce that to 23.6% (Scenario 1). The resulting populations would number around 5 million and 16.3 million respectively. Thus, the reduction of 4.6 percentage points in ageing (by comparison with the zero migration scenario) would come at a ‘cost’ of 11 million additional people. Similarly, the addition of 10.4 million migrants over the period 2013–2068 would reduce the proportion under the equivalent of Statistics New Zealand’s medium variant projection (Scenario 7) in 2068 by just 3.5 percentage points.
In other words, it requires unrealistic levels of net international migration to have an appreciable impact on population ageing. And you can see that for yourself if you look back at the diagram from Allen's article I reproduced above. The difference between 200,000 net international migration and 280,000 net international migration per year is almost imperceptible in terms of the impact on the dependency ratio. It would take millions of annual migrants to 'balance' the increasing dependency ratio arising from population ageing. And then, as I note above, millions more to offset the ageing of those migrants. And so on.

Notwithstanding all the analysis in the papers I mentioned above, international migration actually could be a solution to population ageing. However, this solution only presents itself if the migration is the outward migration of older people (not the inward migration of younger people). As far as I know, no one is yet advocating for rounding up oldies and jetting them off overseas to see out their remaining days, in order to lessen the burden on the working age population.

So, forget balancing population ageing with migration - it isn't going to happen.

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