Countries around the world are facing a problem with an aging population and slowing population growth rate. Some of the countries that will be most affected by this on the near future are Japan, Spain, Italy, Germany, France and the UK among many other developed countries. With these changing demographics governments must find a way to lessen the affect this will have on the economy, at home and abroad.
An aging population is one were a greater percentage of the population is over the age of 65, therefore increasing the dependency ratio and decreasing the number of workers in the labor force. Some of the main problems faced by this situation are, increased government spending on healthcare and pensions with lower tax revenue from fewer workers, requiring higher taxes which can create disincentives to work, a general shortage of workers, and changing sectors in the economy to markets focused on older people.
Given the adverse affects these changes could have on the economy, it is important to address these issues before they continue to grow. One proposed solution to the shrinking work force is immigration. Increasing or promoting immigration in countries affected by this change in demographics can fill the lost work force that the home country cannot replace. This not only mitigates the potential problems faced, but also improves the job possibilities for those in other countries. It is also believed that “if future immigration was at 2001-2002 levels instead of at around 900,000 per year it would reduce the Social Security trust fund’s long-term shortfall by 12%” (Forbes) in the United States. Which would have a huge impact on economy especially when taking into account state debts.
There are obviously other things to look at outside of the economic impact in the short term, such as, long term affects as well as social and political stipulations. However, those issues aside, the current immigration policies and opportunities will not be conductive the type of immigration needed to fill the vacated positions. By changing these policies to help increase both high skilled and low skilled immigration, these countries may not face the foreseen problems.
Immigration as a solution to the increasing age-dependency ratio seems the most obvious answer, as well as the most logical. I would not be surprised to see in the future more countries (like those mentioned above who are becoming more "aged") becoming more open to immigration. Increased immigration would satisfy the demand for low-skilled workers all while reversing the dependency ratio. This reminded me of the broad topic of globalization--the fact that many countries may have to turn to others to fix their problems shows an increasingly intertwined world. If a country makes itself more attractive for immigrants, such as by making it easier to get a visa or by raising wages, it will not only help that country but also the home-countries of these immigrants. Economic benefits will be observed if governments relax immigration policies, as remittances help the home-country and more labor helps the aging countries.
ReplyDeleteI think this article brings up an interesting point. While these countries with aging populations search for remedies to the upcoming problems with a decreasing labor force, the problem can only last so long. It seems as if the baby-boomers generation is nearing retirement, if they aren't already, and this means increased spending on healthcare and social security. This will obviously effect tax rates in those nations, as they frantically try to increase government revenues to fight the aging population. I agree that promoting immigration to these aging countries could help fight the lost labor problem, but as we have learned in class, one of the biggest incentives for migration is higher wages. I feel that it will be hard for these countries to alter wages enough to entice people to migrate there. Although, there are other reasons that cause people to migrate, I am not sure how these governments will be able to create incentives great enough to promote migration. These countries must keep in mind too, that the aging population will eventually begin to shrink as people die. Although this is a harsh reality, when an aging population shrinks, government spending decreases as a younger labor force requires less government support. I think once the aging population problem begins to end, these countries will witness substantial growth as the younger labor force causes the economy to grow.
ReplyDeleteI believe that immigration in fact is a great contributor to depopulation. If you look at some European countries like Germany, Italy, and Spain, you are able to acquire their citizenship simply by being blood descendent from these nations. Therefore, increasing the number of population count in the county.
ReplyDeleteI think it is a logical solution to grant US citizenship to illegal workers to help with the aging population problem. There is another blog post about illegal immigration and how it would boost the economy (link below).
ReplyDeletehttp://abcnews.go.com/ABC_Univision/Politics/undocumented-immigrants-citizenship-boost-economy/story?id=18790677#.UXmo2ZWothp
It does not seem obvious at first, but yes immigration may be the solution to depopulation. Immigration surely has its perks. As long as immigrants are not coming solely for benefits and not wanting to work... I think it might be useful. However, if immigrants move to the U.S. and eventually have their families follow and soak up the benefits and free health care... taxes will continue to rise and retirement pensions and other desired things will not exist.
ReplyDeleteKatie, From what I know most of the benefits that you are talking about in terms of healthcare and most of the government benefits are not given to illegal immigrants therefore the only one's who qualify for most of the benefits are legal residents or U.S. citizens. Second of all most of the immigrants come here looking for jobs. They also contribute to American economy. However I am sure there might be some sort of benefits that is out there for immigrants who can't find a job while they are job searching.
DeleteEncouraging migration to countries with aging populations could be an effective way to add young people to a countries population. As we discussed in class, many countries that are dependent upon immigrant workers have certain amounts of time that the workers are permitted to stay. If countries want to encourage effective migration, they must implement policies that welcome immigrant workers instead of place them into situations equivalent to indentured servitude. They also must find ways to encourage workers to bring their families with them instead of coming to work and sending money home.
ReplyDeleteEncouraging migration does seem like a logical way to deal with this problem of an aging population, which will also start affecting the U.S. very soon. However, I think that Nick brings up a very good point: there is a risk of the inevitable increase of taxes making work harder to find for these migrants, especially if the numbers of them coming to developed nations increases. Soon that opportunity they are looking for might be harder to find. However, I think this is helpful at least for now, as it is best to start dealing with this issue before it becomes a big problem.
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