Modelling Aging and Migration Effects on Spatial Labor Markets

Population aging is a growing global phenomenon, with some countries already seeing dramatic aging, and others just starting to see their populations’ age. With the old representing an increasingly large proportion of the world’s population, the implications of aging societies include economic development, welfare, public finance, consumption, and mobility patterns. This chapter covers the demography of aging before moving on to consider the linkages between migration, immigration and aging along with policy options associated with aging societies. As societies age, larger numbers of the old will be mobile, although it is unlikely that the mobility rate will increase. Although internal migration can redistribute older populations across space, with implications for sending and receiving regions, it will not change the overall population profile of a country. Instead, immigration is the most likely option to reduce or slow the aging of a population, but it too is limited in its effect.

Demographic developments in our world (e.g., aging processes, changing birth and death rates) are increasingly influenced by migration movements. A rising number of people is ‘on the move’, in search of a better fortune elsewhere. It is noteworthy that nowadays many migration movements do not show anymore stable patterns, but reflect a high degree of dynamics, for instance, in the form of return migration, circular and temporary migration, or chain migration. There is also a great heterogeneity in the motivations of many migrants that may have significant impacts on the migration choice, the destination place, the migrant’s status, and the duration of stay. Consequently, return migration, temporary migration and circular migration have in recent years become important research and policy issues. This note offers a short review of the dilemma’s and assessment issues inherent in the effects of non-structural or temporary migrants (so-called ‘movers’) on host economies. Particular attention will be paid to circular migration policy in Europe as a vehicle to both mitigate temporary tensions on regional labour markets of host economics and to provide a solid base for sustainable growth in the sending countries. Various research and policy challenges are outlined as well.

The impact of climate change has drawn growing interests from both researchers and policymakers. Yet, relatively little is known with respect to its influence on interregional migration. The surge of extreme weather conditions could lead to the increase of forced migration from coastal to inland regions, which normally follows different patterns than voluntary migration. However, recent migration models tend to predict unrealistic migration trends under climate change in that migration would flow towards the areas most adversely affected. Given the great uncertainty about the magnitude and distribution of severe weather events, it is almost impossible to foresee migration directions by simply extrapolating from the data on how people have responded in the past to climate and weather. For example, weather events will likely be far outside of what has been observed. Other issues include a poor climate measures and a poor understanding of how climate affects migration in an entirely different structural environment. Unintended consequence of public policies also contributes to the complication of predicting future migration pattern. In this paper, we survey the limitations of existing climate change literature, explore insights of regional economic studies, and provide potential solutions to those issues.

Globalization involves South Asia, a group of migrant poor and nearby nations that send migrants to rich countries in the western world, to dependent countries in the Golf Area and to emerging economies in Asia, which development influences the way we sea and react to migration. The aim of the paper is to understand the impact of institutional barriers in migration looking at South Asia. What are effects if those barriers ceased to exist? What will happen with the collapse of the oil rents in the Middle East? What might happen with the take-off of some countries in the region? To answer these questions the paper presents a contextualization of South Asia in the World, estimates the migration model to identify the demographic, economic and institutional factors that pushes and pulls migration. The conclusion proposes some synthesis and future work on the impact of institutional barriers on migration.

Agglomeration economies reinforce the economic activity concentration, stimulating unbalanced growth and uneven development. In this context, the development of lagging regions will largely depend on government intervention, as market forces by themselves are very unlikely to overcome polarisation effects, and may actually increase regional inequality. Within this context, migration helps to explain the spatial distribution of workers and the skill composition of the local labour force. At a first glance, migration should be able to equalise real regional wages, but it ends up reinforcing regional disparities. Therefore, this paper aims to investigate the relationship of migration and local labour market outcomes. It explores the role of the initial level of local development for the potential attraction of high-skilled workers and the effect different migration flows will have over local wages. The main results indicate that migration seems to reinforce regional disparities, through larger flows of skilled workers towards more developed centres and with local wages in these areas being positively affected by such flows.

Europe is in a phase of vast transition regarded both from a demographic and economic-structural point of view. Studies have shown that demographic development differs a lot when comparing urban regions with more sparsely populated peripheral regions. These diverging patterns are shown to be especially strong in the northern and eastern parts of Europe where a redistribution of people contributes to a concentration process to the metropolitan or big city areas as well as to shrinkage and depopulating of rural and peripheral areas. This paper empirically addresses these differing demographic development paths by analyzing the influence of key underlying demographic factors on population change across European regions. For the stated purpose the paper applies typologies based on both economic and demographic structure and a cross-regional regression model. The economic-structural typology developed within the ESPON/EDORA-project is used to describe and analyze economic-structural factors and a typology based on demographic characteristics that classify regions as either shrinking or expanding in terms of population is used in the empirical assessment. Findings indicate that age structure is of importance with regard to population changes and there exists an east-west divide between the growing west and declining east where the declining sectors are more frequent. It is also shown that large and densely populated regions have better preconditions for growth and fewer risks for shrinking than small and sparsely populated ones.

As is the case in most developed countries, the population of New Zealand is ageing numerically and structurally. Population ageing can have important effects on the distribution of personal income within and between urban areas. The age structure of the population may affect the distribution of income through the life-cycle profile of earnings but also through the spatial-temporal distribution of income within the various age groups. By decomposing New Zealand census data from 1986 to 2013 by age and urban area, this chapter examines the effects of population ageing on spatial-temporal changes in the distribution of personal income to better understand urban area-level income inequality (measured by the Mean Log Deviation index). We focus explicitly on differences between metropolitan and non-metropolitan urban areas. New Zealand has experienced a significant increase in income inequality over the last few decades, but population ageing has slightly dampened this trend. Because metropolitan areas are ageing slower, the inequality-reducing effect of ageing has been less in these areas. However, this urban-size differential-ageing effect on inequality growth has been relatively small compared with the faster growth in intra-age group inequality in the metropolitan areas.

Population ageing, which is being driven-up as the ‘baby boomer’ generation are reaching the traditional retirement age, will generate an increased demand for housing alternatives that are more suitable for older people, including retirement village living. Key questions to ask are: (a) what will be the level and propensity for older people to seek to ‘downsize’ rather than ‘age in place’?; (b) what motivates them to do so?; (c) what role do retirement villages play as a housing alternative for older people and what will be the level of demand?; and (d) what will be the locations that are best to develop new villages? Demographic and spatial modelling approaches, as developed by regional scientists, may be used to help address these issues.

Germany is expected to decline in terms of population in the next few decades. In the transition period, the working-age population will shrink faster than the share of pensioners. This phenomena, the “demographic change”, puts pressure on the welfare system and therefore, strategies are requested to face the demographic process. Strategies discussed in the political and scientific debate are the exhausting of the labor force that is available, e.g. employment of females and older workers, and immigration. We consider these channels and its impact on firm productivity using comprehensive German firm-level data. Our evidence suggests that such channels are not harmful for the firm but there is also no strong positive relationship. Thus, at least the channels considered may contribute to the reduction of the burden of the demographic transition.

Persistence of high youth unemployment and dismal labour market outcomes are imminent concerns for most European economies. The relationship between demographic ageing and employment outcomes is even more worrying once the relationship is scrutinized at the regional level. We focus on modelling regional heterogeneity. We argue that an average impact across regions is often not very useful, and that—conditional on the region’s characteristics—impacts may differ significantly. We advocate the use of modelling varying level and slope effects, and specifically to cluster them by the use of latent class or finite mixture models (FMMs). Moreover, in order to fully exploit the output from the FMM, we adopt self-organizing maps to understand the composition of the resulting segmentation and as a way to depict the underlying regional similarities that would otherwise be missed if a standard approach was adopted. We apply our proposed method to a case-study of Germany where we show that the regional impact of young age cohorts on the labor market is indeed very heterogeneous across regions and our results are robust against potential endogeneity bias.

This study analyses the effect of population ageing in the ten federal states (Länder) of West Germany during the period ranging from 1970 to 2014. To that aim, we estimate a Bayesian VAR model including wages, labour force participation rates, unemployment rates and the share of population above 65 years. Structural regional labour market shocks are identified employing a combination of zero and sign restrictions. Our findings suggest that shocks to population ageing on impact, increase the participation rate, the unemployment rate and decrease wages. However, the above effects on participation and unemployment are short-lasting and after a few periods their response is inverted. Our variance decomposition analysis reveals that the most relevant channel of impact on the economy implied by ageing is that of wages.

This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, full-time employees in Western Germany during the period 1999–2010. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker’s wages by about 3%. Moreover, our results suggest that a substantial part of this effect can be ascribed to members of larger age groups being more likely to be employed in lower-paying occupations.

Gibrat’s law and Zipf’s law describe two very well-known empirical regularities on the distribution of settlements. Many studies have focused on the analysis of both these regularities, stimulated by the idea that an accurate description of the distribution of people in space is important for both policy-relevant purposes and for specifying more appropriate theoretical models. However, the existing literature provides an analysis of Gibrat’s and Zipf’s law without taking into account the demographic characteristics of the population under analysis. Given the fact that many countries, and especially those in Europe, will become ageing societies in the decades to come, the aim of this chapter is to provide a more accurate description of the distribution of people, taking into account the demographic differences between people. In this analysis, we focus on both municipal population (place of residence) and employment (place of work) data for Germany between the years 2001 and 2011. Here, we provide evidence of different behaviour in the cohorts of older people. Theoretical models of urban growth that aim to be more fit-for-purpose need to take this different behaviour into consideration.

The mobility of young adults is often related to education and employment. In Australia, there is a strong regional dimension to this mobility with state capital cities like Melbourne attracting people from non-metropolitan regions. Spatial patterns of skills accumulation and deficit arise from youth migration to cities, and this continues to be a concern for regional policy makers seeking to boost non-metropolitan growth. However, despite the net flows of human capital towards capital cities, many regional centres still maintain diverse economies and many professional workers choose to locate there. To better understand the characteristics and migration histories of these professional workers, a survey of three workforce samples was undertaken in the city of Bendigo (150 km from Melbourne). These samples (total: 734) were from the Bendigo Bank (n = 440); Bendigo Health (n = 119) and Greater Bendigo City Council (n = 175). While it was expected that metropolitan areas would play a role in migration pathways and skills acquisition, variation was found between the workforces, with one proving to be very regional in its character (Bank) while the others (Council and Hospital) drew workers from both metropolitan and rural areas. Spatial patterns of human capital accumulation are explored in this paper with a view to understanding where such capital is developed and where it subsequently locates. Such analysis will assist policy makers in developing more effective attraction and retention strategies for regional Australia.

Technological progress can have contradictory effects on employment development. On the one hand there is a substitution effect, because the same product can be produced with less labour. On the other hand there is a compensating effect, because prices will be decreased and therefore product demand and also labour demand will be increased. In the article the relative strength of the two effects is discussed and a brief empirical analysis for Germany is given.