Who Needs a Wall When You Have Demographic Trends?

Who Needs a Wall When You Have Demographic Trends?

What if you built a wall to keep people out, and it turned out that no one really wanted to get in anyway? Okay, some people might still want to enter the U.S. from Mexico and other countries which have typically supplied low skill labor, but it looks like their numbers are dwindling. In fact, thanks to some demographic trends that are getting lost amidst the general hubbub, it may be that the numbers of migrants are headed down anyway, no wall required.

brookingsDemographics explain a lot, or at least that is my bias. They certainly explain a lot of the reasons why there was such a rush to countries like the U.S. from Mexico and Latin America in the past decades. The U.S., like much of the world, had a baby boom that lasted until the mid-1960s. That meant the supply of domestic-born, young, labor grew rapidly until the 1980s and then grew less rapidly thereafter. In other parts of the world, including Mexico, the baby boom went on longer which meant that young, low-skilled workers jostled with each other to get jobs in their home countries. Inevitably, some headed for the U.S., some illegally. That’s the part of the story we know, and it is that rush to reduce the number of illegal immigrants that is behind the idea of putting up a wall between the U.S. and Mexico. Except, maybe those who want that wall should maybe be considering whether it is worth the trouble.

The situation is outlined in this paper by economists Gordon H. Hanson, Chen Liu and Craig McIntosh of the Brookings Institution.  As they see it, between the early 1980 and the mid-2000s, there were lots of reasons for migration from Mexico and elsewhere in Latin America to the U.S..  The U.S. economy was strong, and for those seeking relatively low-paying work, there was not a huge amount of competition from the U.S. born population, a situation at odds with their circumstances at home. Around the time that the last recession hit the U.S., however, the undocumented population in the U.S. declined by an annual average of 160,000 for the years from 2007 to 2014.  Economics, the authors believed, just hastened a story that was going to happen anyway as a result of demographics.

So what does come next? Well, again you need to look at the demographics to understand it. The authors did that and came up with a very dramatic profile of what they expect migration to the U.S. to be over the next decades.  Using population projections from the United Nations as well as historical migration data, they modelled the likely inflows into the U.S. through 2050. The picture they came up with for the next thirty years looks almost like the inverse of the last thirty. And keep in mind that is not assuming any kind of wall, merely a continuation of demographic shifts that are already taking place.

The dwindling supply of young labor post-baby boom is one that is being mirrored in many countries including China. Think about it: Mexico provided cheap labor for Americans while China provided cheap goods made by cheap labor. When all of these countries age, what happens to the cost of living in the U.S. and elsewhere? It is an economic problem that does not get discussed as much as it should, but the reality will hit soon enough.

In the meantime, plans for a wall continue. No doubt once constructed the numbers of migrants from Mexico will fall, but analysts looking at the future numbers might want to consider the actual cause of that decline.

 

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