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Saturday, September 17, 2005

Spain's Demographic Transition

Well, not really. This post is just an excuse to put up a couple of links. Firstly this one on "The regularisation of undocumented migrants as a mechanism for the ‘emerging’ of the Spanish underground economy" by Francisco Javier Moreno Fuentes. Actually the paper is about undocumented migrants, and it is also about theunderground economy (see the incredible graph on page 9 which shows the evolution of Spain's underground economy since the late 70s), but I am not convinced that they demonstrate that the recent amnesty is an emerging of the submerged economy rather than the transition of some irregulars from the underground to the official one.

Interestingly the author is under no illusion as to why immigration is such a maasive phenomenon in Spain today:

The publication of a report by the population division of the UN, pointing at the ageing and decline of the Spanish (and European) population was the starting point for a debate that tried to reflect on the consequences of having one of the lowest fertility rates in the planet6. According to the UN projections, in the year 2050 Spain would have the oldest population in the world, and it would need some 12 million immigrants to keep the actual ratio of 4 workers for every retired person7. Although UN experts recognised that the levels of migration predicted by that report would be socially and politically unthinkable in Europe, they stressed the importance of those demographic trends and pointed out that substitution migration will be a reality in Western Europe in the near future.

Actually the situation he documents wil reveal that Bryant and de Fleurieu aren't exactly spot on when they say:

"In fact, immigration policies are a more significant determinant of migration than the willingness of individuals to migrate. Large movements of people across borders
in the coming decades are thus unlikely - under current policies - to significantly mediate the macroeconomic effects of asymmetric demographic transitions."

Well no. Spain is a good counter example here. You need to distinguish - as in other cases like the US, France, Belgium - between official and unofficial government policies, and at the present time a large flow of people into Spain is constuting a demographic shock which is mediating the macro-economic effects of the demographic transition here. Of course, it is a moot point to what extent all this is being driven by a monetary shock from the ECB which is providing negaive interest rates to fuel what must be the planets (proportionately) biggest housing boom.

And if you want to know more about submerged economies, and just how to measure them, then this paper is just what you are looking for.

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