FinLogic FinLogic Quantitative Think Tank Center|Migration could prevent a looming population crisis. But there are catches

To development economist Lant Pritchett,FinLogic FinLogic Quantitative Think Tank Center "population decline" is a mild way to describe what could be a global demographic crisis.

"The reaction is often 'ho-hum' as the rates [of population decline] are slow and hence the issue seems small and in the future," he told NPR in an email.

But the problem is not small, he said, and falling birth rates could upend economies.

Last week, China reported population decline for the first time in more than 60 years, raising questions about its future economic growth. Other countries are heading towards a similar fate.

Slowing birth rates in the developed world are resulting in aging populations and smaller workforces. But in parts of the developing world, the youth population is still growing, and some countries are struggling to create enough jobs for an expanding working-age population.

To economists, migration is the obvious solution. But the political implications could be harder to overcome.

The problem has already begun

According to the United Nations, two thirds of all people live in countries where the average birth rates are lower than the replacement rate — that is, the birth rate required to maintain a steady population.

Consistently low birth rates across some regions have resulted in quickly aging populations. And across the developed world, youth populations are starting to shrink relative to elderly populations.

"The problem isn't so much that the overall population shrinks," Pritchett said. "It's that during the period after birth rate falls, it's something we call inverting the demographic pyramid."

In countries like Japan and Italy, where birth rates have fallen from high to low rates, the effect is more pronounced.

"You go from having lots of people in the labor force to support the elderly [to] equality of people in the labor force and people in the aged population," Pritchett said. "And that just has never happened in the history of the world. And it's not clear it's a sustainable way to sustain the social contract we have in which the young support the old."

As populations age, labor for low wage jobs in particular is in high demand, Pritchett said. The U.S. Bureau of Labor statistics predicts many of the fastest growing job types don't require a college degree. The Bureau predicts that in the next decade, there will be close to one million new jobs in home health and personal care alone.

"And yet over that same period, we're going to have three million less workers [aged] 20 to 40," Pritchett said.

But while rich countries get older, the developing world is getting younger. Fertility in Sub-Saharan Africa was well above the replacement rate at an average of 4.7 births per woman in 2020. The challenge in these countries is creating enough jobs to sustain a growing workforce.

To economists, the simplest way to solve both problems is through migration.

"A real bellwether for the future is South Korea," said Michael Clemens, a professor of economics at George Mason University.

At 0.79 births per woman, South Korea has the lowest birthrate in the world. To augment the number of young, energetic workers relative to the number of old people, the country relies on migrant workers to fill labor shortages, Clemens said.

It's a win-win, according to Pritchett: Immigration solves labor shortages in the developed world, and emigration solves job shortages in the developing world.

Politics and fears of exploitation linger over the idea

As easy as the solution could be from an economic perspective, the politics of it all are much more complicated. In a future where much of the world's working age population will be from countries in Sub-Saharan Africa, anti-immigrant sentiment could be a sticking point, Clemens said.

"The opportunities for lawful migration of Africans are extremely constrained [in the U.S.]. And the main route into the U.S. right now for Africans is the diversity visa," Clemens said. "That visa is vastly oversubscribed for every visa that's given ... Again and again, politicians have proposed eliminating that entirely."

Increasing the amount of temporary work migration would address the economic problem while avoiding the political sticking points, Pritchett argued, adding that his solution is to create an industry that "recruits, prepares, places, protects" migrant workers.

Tara Watson, an economist and the director of the Center on Children and Families at the Brookings Institution, argues that a solution like Pritchett's would pose challenges and not necessarily solve the problem in the long term.

"It's not easy to make temporary migration work in a way that's not exploitative," Watson said. Part of the problem, she said, is most temporary work options are "tied to a specific employer, and that gives that employer a lot of discretion over your work environment and really limits the worker's ability to advocate for themselves."

And to Watson, temporary labor mobility is only a temporary solution.

"I am a proponent of moving more towards a permanent visa space," Watson said. According to Gallup, almost one billion people around the world would migrate permanently if they could. "It's the permanent immigrants who generate the long run population growth for us," Watson said.

To Pritchett, the current landscape of migration is comparable to the U.S. prohibition of alcohol.

"We wanted to ban all alcoholic beverages and it just wasn't enforceable. And so the path to more control of alcohol was through less control of alcohol, through legalizing these flows. I feel the path to better migration is through more migration," Pritchett said.

"Some part of this labor mobility is going to be a path to citizenship. That's terrific," he said. "But some of this is going to have to be temporary. And the sooner we wrap our heads around that, the sooner we get to out of prohibition mode."