Labor market effects of demographic shifts and migration in OECD countries

Abstract

The labor force of each industrial country is being shaped by three forces: ageing, education and migration. Drawing on a new database for the OECD countries and a standard analytical framework, this paper focuses on the relative and aggregate effects of these three forces on wages across different skill and age groups over the years 2000 to 2010. The variation in the age and educational structure of the labor force emerges as the dominant influence on wage changes. The impact is uniform and egalitarian: in almost all countries, the changes in the age and skill structure favor the low-skilled and hurt the highly skilled across age groups. Immigration plays a relatively minor role, except in a handful of open countries, like Australia and Canada, where it accentuates the wage-equalizing impact of ageing and education. Emigration is the only inegalitarian influence, especially in Ireland and a few Eastern European countries which have seen significant outflows of high-skilled labor to Western European Union countries.

Who’s About to Leave? A Global Survey of Aspirations and Intentions to Migrate

“…More precisely, scholars have theorised that migration should be interpreted “as a basic response to perceived opportunity differentials” (Czaika and de Haas, , p. 424), combined with individual aspirations, and showed how the result of this interaction varies according to national and local context, but also households and individual characteristics. In the same vein, economists seek empirical evidence on the drivers of migration “potential” (Docquier et al, ) and how this materialises into concrete movements. Policy makers are eager to better understand migration in all its phases and to anticipate future migration movements (Laczko et al, ).…”

Immigration, welfare, and inequality: How much does the labor market specification matter?

“…This is important because the mismatch between the skill level of workers and the skill content of the tasks actually performed might affect the wage, employment, and distributional effects of immigration. Fourth , another avenue would be to use our benchmark model with endogenous labor force participation and employment to compare the welfare effects of immigration to the impacts of demographic changes in the native population (as done by Docquier et al (2019) in a simpler framework). Lastly , another interesting work for future research would be to compare the welfare effects of immigration to rising imports of low‐skilled and high‐skilled labor intensive goods.…”

Labor Market Institutions, Fiscal Multipliers, and Macroeconomic Volatility

“…There are, of course, many other important structural labor market characteristics which affect the transmission channel of fiscal shocks. Prominent ones concern the degree of labor market openness to foreign workers (see, for instance Amuedo-Dorantes and Rica, 2013;Godøy, 2017;Schiman, 2021), the declining trend in labor productivity (see, for instance Policardo et al, 2019;Li et al, 2021), or demographic changes (see, for instance Docquier et al, 2019). We limit our analysis to the categories mentioned above due to data availability.…”