Global Demographic Transitions: Why Migration Matters

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by Tyler Durden
Friday, Feb 23, 2024 - 08:30 AM

By John Kemp, Senior analyst at Reuters

China’s rapid demographic transition has been extensively covered in the mainstream media in recent months, with multiple stories exploring the country’s low birth rate and peaking population, assessing whether the country will become old before it becomes rich (“How China Miscalculated Its Way to a Baby Bust”, Wall Street Journal, February 12, 2024, and “China’s Fertility Rate Dropped Sharply, Study Shows”, Wall Street Journal, August 19, 2023).

China is an outlier, with an average income that puts it in the middle-income group of countries, but a relatively old population and low birth rate that have more in common with high-income countries.

But rapid demographic transitions are underway across all the major high-income countries as natural reproduction falls sharply. The difference between countries where population is expected to shrink rapidly in the next few decades (e.g. Japan and Italy) and those where the decline is deferred (e.g. United States and United Kingdom) lies in their attractiveness and openness to international migration.

The population in the more developed regions is much older than in less developed regions. Median ages in North America (37.9 years) and Europe (41.7) are much higher than in Asia (31.2) and Latin America (30.3) let alone Africa (18.6). Even within developed regions, the median is far higher in Italy (46.8) and Japan (48.4) compared with younger societies such as the United Kingdom (39.6) and the United States (37.7), in part because of past migration. 

In most regions, except Africa, natural reproduction has fallen below the level required for the population to maintain itself. The reproduction rate is especially low in China (with just 0.54 surviving daughters born to each woman on average over the course of her lifetime) as well as Italy (0.62) and Japan (0.63). Reproduction rates are higher in the United Kingdom (0.75) and the United States (0.80) but not high enough to sustain the population at current levels.

In countries characterised by low levels of immigration, or net emigration, populations have already peaked, or will do so within the next few years. Populations have already peaked in Japan (2010), Italy (2014) and China (2022). Italy’s population has already declined by around 1.2 million (2%) while Japan’s population has shrunk by almost 3.9 million (3%).

By contrast, in countries characterised by significant inward migration, the peak has been postponed, in some cases significantly. In the absence of immigration, the population of the United Kingdom is projected to peak in 2029, but with migration the peak is deferred until 2055. In the United States, the projected population peak in 2037 is deferred until after 2100.

China and India are both expected to see small but steady outward migration, reducing their population totals marginally in the coming decades. Emigration is projected to reduce China’s population by 10 million (1%) and India’s by 17 million (1%) by 2050 (“World Population Prospects”, United Nations Population Division, 2022).

In projecting populations - and the associated impacts on economic size, energy consumption, housing demand, land use, and military capabilities - openness and attractiveness of countries to migrants is therefore just as important if not more so than birth rates among the already resident population.

Openness and attractiveness to migration is to a large extent a policy choice. Migrants grow the size of the population and the economy but increase pressure on the housing stock and pose challenges for assimilation with the already resident population. But absence of migration also poses challenges as populations decline, housing stock is unused, and settlements shrink or are abandoned.

In the United States, the United Kingdom and Canada, rapid immigration and population growth has been a key driver of rising housing costs. But in Japan and Italy, shrinking populations are driving depopulation of rural areas and smaller towns.

China is set to face the same problems on a large scale. The country is ageing rapidly and not attracting immigrants (in fact it is exporting population). As a result, the population is projected to shrink by 9 million (1%) by 2030, 46 million (3%) by 2040 and 109 million (8%) by 2050, with associated impacts on land use, energy consumption, real estate and rural/urban/provincial distributions.

The key point is that in thinking about energy consumption, economic size, land use and military power, migration matters; assumptions about openness and attractiveness to migration make a profound difference to the outlook.