Go West Young Man

My preocupations about the impact of demographic change on German society are already pretty well known. Well if Germany as a whole has a sizeable problem, the former East German Lande have a huge one. The state-owned KfW development bank project in a report out today (German only unfortunately, an English version of the press release is here) that the while the population of the old West Germany will drop by six percent between 2002 and 2050, that of the six eastern states will decline by a whopping 25%. Not to mention the fact that those who remain are likely to be even older on average than their Western counterparts. As a consequence the available workforce is likely to fall by a staggering 55%.

The issues raised by this research are large and important. Is, for example, East Germany now in irreversible decline? Can this process repeat itself elsewhere (including between rather than within nation states) as younger, more highly skilled and more mobile workers leave ageing and relatively more depressed areas etc?

The issue of migration from East to West Germany been receiving attention for some time now. Frank Heiland in a survey “Trends in East-West German Migration from 1989 to 2002” (follow the link and go to Volume 11 article 7) argues that there have been two waves of East-West migration The first one, 1989-1990, was triggered by the opportunities and uncertainties before the Reunification; the second one, since 1997, coincides with economic stagnation in the East and improving job prospects in the West.

To put this in perspective we should remember that during the summer of 1989, a reduction in police patrols at the Hungarian border enabled East German tourists to start to enter West Germany via Austria. Subsequently mounting pressures from the East German public for political and economic reform led to the fall of the Berlin Wall in November and as a consequence migration from East to West Germany (and beyond) became possible. Thus between 1989 and 1990, almost 600,000 East Germans – roughly 3:7% of the entire population – emigrated to West Germany.

Heiland finds that during the second wave, outmigration rates to the West increased across all East German Länder and have reached levels close to those observed prior to reunification. (Since 2001 the rates appear to have been around 1.5% of the population per annum). He also demonstrates what most people already imagine: that the trends by destination region indicate that during the second wave of East-West migration, the economically strongest regions in West Germany, Baden-Württemberg and Bayern, are again the most favorite destinations of East-West migrants.

Going back to the KfW report for a moment, two quotes from chief economist Norbert Irsch seem to tell their own story:

“Fewer inhabitants means less tax revenue, less tax revenue means less investment and declining attractiveness. And declining attractiveness leads to a declining population”

“(Unemployment is) an enormous burden for the people in the east, not only financially but psychologically, since it leads to apathy, destroys any hope for the future and spurs migration,”

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

6 thoughts on “Go West Young Man

  1. We are seeing a dumbing down by migration. Literally, average draftee IQs in the east are lower. But this is an unlikely model for the future. Only within a nation would a migration of this magnitude be tolerated.

    In a situation of natural decline however, you would most likely see an increase in qualification as nations react with automatisation.

  2. And on second thought, you are not seeing demographics causing an economic downturn, but economics causing a demographic meltdown. Before 1989 the population of East Germany was younger than the population of West Germany.

  3. “but economics causing a demographic meltdown”

    Yes this is the point here. In fact the whole thing seems to me to be ‘path dependent’: ie a small (or at least only moderately large) difference in initial conditions can lead to a huge tilt.

    Now the question is could this process repeat itself *across* national frontiers? In one of the baltic states, for example, or of course Bulgaria. I think this is one of the great unknowns of asymmetric demography.

  4. Who would take the migrants? Birth rates can go way down. We’ve seen that. But how could a migration in so large a scale be feasible? Also in the normal case (except for South America) there is a language barrier to migration.

    For the recieving country it doesn’t not matter why the immigrants are coming. If the numbers become too high, the borders are closed.

  5. “the borders are closed.”

    Borders, Oliver, turn out to be extraordinarily permeable.

    “Who would take the migrants?”

    Any country with a demographic deficit who knows what it is about. I guess the UK would be glad to accept a lot of people from Eastern Europe with the same characteristics as those who are currently moving from East to West Germany. Spain would just love to have them (inward migration now 1.5% of population per annum) – it seems to be migrants from Sub-Saharan Africa that Spain doesn’t want – Italy too (latest data reveal Italy is legalising immigrant workers at a rate of 1.1% of population per annum).

    “But how could a migration in so large a scale be feasible?”

    I don’t know whether it’s feasible or not, just that the data shows that in some areas it is happening.

    “economics causing a demographic meltdown”

    Actually I should modify what I said, the two in fact inter-act in a dynamic process. In some cases this process has positive feedback properties, and in others negative feedback ones. Under certain conditions – as we can see in the old DDR case – the economics feeds-back on the demographics to produce meltdown. What I am surprised about is that there is so little interest in this topic, as it seems to me there are a lot of lessons to be learned from what is happening here.

  6. Australia would love to have such immigrants…what with only 20 million people in a land area the size of the US. They are even putting out ads in German newspapers.

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