1 1 Forecasting migration flows to and from Norway using an economic model Helge Brunborg and Ådne Cappelen Research Department Statistcs Norway Joint Eurostat/UNECE Work Session on Demographic Projections Lisbon,28-20 April 2010

2 Migration to and from Norway, Rapid growth: Net immigration quadrupled in 4 years

3 Registered and projected net immigration to Norway Immigration Net immigration Emigration Projections

4 Migration of Polish citizens to and from Norway Net immigration of Polish citizens 2003: : Immigration Emigration Net immigration

5 Migration of Icelandic citizens between Iceland and Norway Net Norway  Iceland Thick lines: Statistics Norway Thin lines: Statistics Iceland Iceland  Norway

6 Immigration to Norway by registered reason for immigration

7 Norwegian economy Rapid economic growth due to oil and gas in the North Sea Most of the revenue from the North Sea invested in The Government Pension Fund - Global In 2007 the GDP per capita in Norway 76% higher than in OECD Low unemployment, 2-4% in recent years High demand for labour in the construction sector Norway also hit by the financial crisis, but is recovering

8 Migration theories People migrate when the expected income is greater than the current income, less migration costs (Todaro) Individual migration behavior is guided by the search for better economic opportunities (Borjas)

9 Methods for projecting migration A projection of population must rest, in part, on a projection of immigration. Yet most official immigration projections … rely on ad-hoc assumptions based on little theory and virtually no definable methodology (Howe and Jackson 2006) Official statistical agencies: Mostly trend extrapolation A few other attempts (Australia New Zealand; British Columbia) EUROPOP 2008: net migration flows between member countries will convergence linearly to zero in the convergence year ( 2150)

10 Theoretical framework Migration from country of origin (o) to country of destination (d) is a function of individual observables and unobservable characteristics: ln w o = μ o + ε o where ε o ~ N (0, σ o 2) ln w d = μ d + ε d where ε d ~ N (0, σ d 2) Decision to migrate: I = ln (w d /(w o + c)) ≈ (μ d - μ o - δ ) + ε d - ε o c and δ: level of mobility costs. Migration if I > 0 Probality of emigration from country o to country d: P = Pr (ε d - ε o > - (μ d - μ o - δ ))

11 Empirical analysis Gross flows between Norway and –Denmark –Sweden –OECD countries –Asia and Africa For Sweden and Denmark: lnM ij = a 0 + a 1 ln (income i /income j ) + a 2 Gini i + a 3 Ui + a 4 U j + a 5 lnM jj t-1

12 Denmark  Norway Sweden  Norway

13 GDP per capita in PPP. Norway relative to OECD

14 Unemployment rates in OECD and in Norway

15 Estimation of the rate of migration from groups of countries to Norway

16 Modelling immigration from Europe and America by OLS, 1972 – 2008, to be used in projections Dependent variable: LnM t Coefficient Std.Error t-value Constant LnM t nn Dummy Dummy Dummy UnNOR t - UnNOR t LnGDPNor t UnOECD t – UnOECD t R 2 = 0.96 F = 108.5

17 Gross and net migration flows to Norway History and forecasts

18 Net immigration to Norway Registered and projected

19 Migration from and to EU and other Western countries Immigration Emigration Net immigration Estimated on data for

20 Migration from and to non-Western countries: non-EU Eastern Europe, Africa, Asia, Latin-America, Oceania except Australia and New Zealand Immigration Net immigration Emigration Estimated on data for

21 Total migration to and from Norway Emigration Net immigration Immigration Estimated on data for

22 Thank you for your attention