forecasting migration flows to and from norway using an economic model

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Forecasting migration flows to and from Norway using an economic model

Helge Brunborg and Ådne Cappelen

Research Department

Statistcs Norway

Joint Eurostat/UNECE Work Session on Demographic Projections

Lisbon,28-20 April 2010

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-10 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

1970 1975 1980 1985 1990 1995 2000 2005 2010

Immigration

Emigration

Net immigration

Migration to and from Norway, 1970-2008 Rapid growth:

Net immigration quadrupled in 4 years

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Registrert og framskrevet inn- og utvandring

-5 000

5 000

15 000

25 000

35 000

45 000

55 000

65 000

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060

Reg. innvandringReg. utvandringReg. nettoinnvandringFramskrevet LFramskrevet MFramskrevet H

Registered and projected net immigration to Norway

Immigration

Net immigration

Emigration

Projections

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Migration of Polish citizens to and from Norway

Net immigration of Polish citizens

2003: 300

2007: 13 000

Immigration

Emigration

Net immigration

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Islendinger til og fra Norge

-400

-200

0

200

400

600

800

1000

1200

1400

1600

2003 2004 2005 2006 2007 2008 2009

Innvandring

Utvandring

Nettoinnvandring

Innvandring

Utvandring

Nettoinnvandring

Kilde: SSB (tykke streker) og Hagstofa Islands (tynne streker)

Migration of Icelandic citizens between Iceland and Norway

Net

Norway Iceland

Thick lines: Statistics Norway

Thin lines: Statistics Iceland

Iceland Norway

6

Immigration to Norway by registered reason for immigration

0

5 000

10 000

15 000

20 000

25 000

1990 1995 2000 2005

Work

 Famiy

Refugee

 Education

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Norwegian economy

• Rapid economic growth due to oil and gas in the North Sea

• Most of the revenue from the North Sea invested in The Government Pension Fund - Global

• In 2007 the GDP per capita in Norway 76% higher than in OECD

• Low unemployment, 2-4% in recent years

• High demand for labour in the construction sector

• Norway also hit by the financial crisis, but is recovering

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Migration theories

• People migrate when the expected income is greater than the current income, less migration costs (Todaro)

• Individual migration behavior is guided by the search for better economic opportunities (Borjas)

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Methods for projecting migration

• A projection of population must rest, in part, on a projection of immigration. Yet most official immigration projections … rely on ad-hoc assumptions based on little theory and virtually no definable methodology (Howe and Jackson 2006)

• Official statistical agencies: Mostly trend extrapolation

• A few other attempts (Australia <–> New Zealand; British Columbia)

• EUROPOP 2008: net migration flows between member countries will convergence linearly to zero in the convergence year ( 2150)

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Theoretical frameworkMigration from country of origin (o) to country of destination

(d) is a function of individual observables and unobservable characteristics:

ln wo = μo + εo where εo ~ N (0, σo2)

ln wd = μd + εd where εd ~ N (0, σd2)

Decision to migrate:

I = ln (wd/(wo + c)) ≈ (μd - μo - δ ) + εd - εo

c and δ: level of mobility costs.

Migration if I > 0

Probality of emigration from country o to country d:

P = Pr (εd - εo > - (μd - μo - δ ))

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Empirical analysis

Gross flows between Norway and– Denmark– Sweden– OECD countries– Asia and Africa

For Sweden and Denmark:lnMij = a0 + a1 ln (incomei/incomej) + a2 Ginii + a3Ui + a4Uj + a5lnMjj t-1

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Migration from

Sweden to Norway Norway to Sweden Denmark to Norway Norway to Denmark

Constant -10.029 (-24.6) -13.80 (-14.50) -7.25 (-37.4) -13.60 (-19.8)

Relative income - 0.504 (-2.97) 0.131 (1.41)

Inequality 9.254 (5.01)

Unempl. Origin 0.035 (2.76) 0.140 (4.26) 0.060 (5.69)

Unempl.destination - 0.223 (-3.31)1 -0.474 (-4.82) -0.089 (-1.77) -0.035 (-4.21)

Prev. immigration 0.814 (7.00) 0.787 (9.20)

Period 1972-2008 1973-2008 1973-2008 1975-2008

1 This estimate is for the change in unemployment and not the level.

-8 000

-6 000

-4 000

-2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

1970 1975 1980 1985 1990 1995 2000 2005

Immigration

Emigration

Net Immigration

-1 000

-500

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

1970 1975 1980 1985 1990 1995 2000 2005

Emigration

Net immigration

Immigration

Denmark

Norway

Sweden

Norway

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GDP per capita in PPP. Norway relative to OECD

90

100

110

120

130

140

150

160

170

180

1970 1980 1990 2000 2010 2020 2030

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Unemployment rates in OECD and in Norway 1970-2030

0

2

4

6

8

10

1970 1980 1990 2000 2010 2020 2030

OECD

Norway

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Estimation of the rate of migration from groups of countries to Norway

Migration from

“EurAm” to Norway

Norway to “EurAm”

“AfrAsia” to Norway

Norway to “AfrAsia”

Constant -8.55 (-7.89) -12.58 (-17.90) -2.29 (-0.79) 7.50 (64.20)

Relative income 0.953 (4.17) 2.34 (3.88)

Unempl. origin1 0.078 (1.49) 0.079 (5.01) 0.089 (3.09)

Unempl.destination - 0.132 (-3.81) -0.111 (-3.52) -0.62 (-1.69)

Prev. immigration 0.713 (10.00)

Period 1972-2008 1973-2008 1973-2008 1972-2008

σ (of eqcm) 0,069 0.062 0.071 0.061

1 The unemployment variables are specified as changes not levels, except for the effect in the fourth column where there is a level effect.

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Modelling immigration from Europe and America by OLS, 1972 – 2008, to be used in projections

Dependent variable: LnMt Coefficient Std.Error t-valueConstant 1.101 0.566 1.95

LnMt-1 0.565 nn.081 6.98Dummy1993 0.312 0.070 4.46Dummy1999 0.162 0.073 2.21Dummy2005 0.166 0.052 3.21

UnNORt - UnNORt-2 -0.062 0.013 -4.82

LnGDPNort-2 0.669 0.152 4.40

UnOECDt – UnOECD t 0.034 0.023 1.49R2 = 0.96 F = 108.5

1975 1980 1985 1990 1995 2000 2005 2010

10.0

10.5

Lnonasia&afr Fitted

1975 1980 1985 1990 1995 2000 2005 2010

-1

0

1

2 r:Lnonasia&afr (scaled)

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Gross and net migration flows to Norway History and forecasts

-10 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

1970 1980 1990 2000 2010 2020 2030

Immigration

Net immigration

Emigration

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Net immigration to NorwayRegistered 1990-2009 and projected 2009-2060

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Migration from and to EU and other Western countries

-10 000

0

10 000

20 000

30 000

40 000

50 000

1970 1980 1990 2000 2010 2020 2030

Immigration

Emigration

Net immigration

Estimated on data for 1966-2009

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Migration from and to non-Western countries:non-EU Eastern Europe, Africa, Asia, Latin-America, Oceania except

Australia and New Zealand

0

10 000

20 000

30 000

40 000

1970 1980 1990 2000 2010 2020 2030

Immigration

Net immigration

Emigration

Estimated on data for 1966-2009

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Total migration to and from Norway

-10 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

1970 1980 1990 2000 2010 2020 2030

Emigration

Net immigration

Immigration

Estimated on data for 1966-2009

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Thank you for your attention