tag:blogger.com,1999:blog-8764541874043694159.post8654258060702466431..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: The zero-sum trade in peopleFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger34125tag:blogger.com,1999:blog-8764541874043694159.post-1840593716392852012014-03-10T23:00:44.371+00:002014-03-10T23:00:44.371+00:00Some points about the "brain drain" - I ...Some points about the "brain drain" - I am not convinced by the idea of a skills shortage (that is anything more than sporadic) being created in countries such as Portugal as a result of crisis-driven emigration.<br />1. While absolute wages paid to an engineer or computer programmer in UK is higher than in Portugal , relatively you would be better off staying in Portugal - your wage vs cost of living will be far more attractive, especially if you are still living with your parents (as many do). You have more social and professional prestige, the first rung on the ladder in an organisation for a first jobber is probably higher, the career path for high fliers more certain and you have arguably more job security (and from a Portuguese point of view, will not have to put up with constant fog and rain, disgusting food or weekends away from the beach).<br />2. Post talks about local firms that can't compete, but in many areas involving skilled staff, we are talking about larger companies in a global market place - so paying a relatively competitive wage is actually easier in Portugal or Spain than in UK. <br />3. While there is a drain brain, a lot of this will be in the public sector. You cannot argue that there is a local skills shortage in this case as there is currently a recruitment freeze in Portugal and other countries (zero demand). As soon as there is demand to hire doctors etc., again, I do not imagine Portugal will have a problem recruiting, given the cushiness of being a state employee, especially in a prestigious career such as doctor. In this case the skills acquired abroad will be of benefit to Portugal. <br />4. A lot of qualified people who can't find jobs at home will not necessarily be able to transfer their skills abroad, e.g. a lawyer (of which there are many in Portugal), and the majority of teachers. While qualified lawyers leaving Portugal may be a loss to Portugal, they are not necessarily of great benefit to UK/Germany etc. Indeed a large problem in Portugal is that many people with university degrees have degrees that are of little use in the labour market, whereas just a few years ago, just being a university graduate was enough to get you a good first job. More controversially - a "qualified" person in Portugal who cannot find a job that is in line with his qualifications may be less willing to accept a job that is "beneath him" at home than abroad, and may therefore emigrate but without hope or expectation of getting a skilled job upon arrival. Therefore you have lots of "qualified" people emigrating who are not actually going to skilled jobs or removing in-demand skills from the local market (Just as many UK graduates are finding it difficult to get skilled jobs).WEAYLnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-39034136870695992182014-03-09T15:58:01.583+00:002014-03-09T15:58:01.583+00:00internal devaluation has been pursued because it c...internal devaluation has been pursued because it can be controlled, i.e. book value of assets can be stabilized and thus the balance sheet of the local oligarchs can be protected, the consequence is a mismatch between the incomes of the vast majority of the population and the prices they can afford. In particular, the Portuguese government enacted a tax law which, cleverly (because subtle), puts a floor on the price of property, the next thing they did was sell visas for property purchases. Coppola's article is spot on. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-84867695536948466152013-06-17T10:03:46.752+01:002013-06-17T10:03:46.752+01:00Frances,
I'm hoping to prepare a more substan...Frances,<br /><br />I'm hoping to prepare a more substantial response to your excellent series of articles on migration, but for now I'd point to two pieces of evidence.<br /><br />First, until recently the salary expectations of Greeks thinking of working abroad generally pointed to a very tight calculus: http://lolgreece.blogspot.co.uk/2010/08/i-can-haz-job-abroad.html <br /><br />That is to say, back in 2010 our labour export market was probably still in equilibrium. <br /><br />Second: I can't dig out my graph for this unfortunately as it was on Twitter (and I've closed my account) but the gap between unemployment of graduates and unemployment of school leavers in Greece has been widening throughout the crisis. The people under most pressure to leave are low-skilled; the economics of migration will certainly not work out for them.<br /><br />Now one might argue that the higher-skilled will tend to leave first anyway because they have more options, and their skills are more marketable, but I should note that they have been doing so in droves for years - no big change there. <br /><br />And then finally there's the language barrier. Greeks generally learn foreign languages quite passionately, and they have long been considered a life skill. Still, some countries are more accessible than others. The Eurobarometer looked into this a couple of years ago and found that we were still disproportionately inclined to migrate to the UK, which at the time was still in recession. <br /><br />http://ec.europa.eu/public_opinion/archives/ebs/ebs_337_en.pdf<br /><br />Bottom line: I don't think migration from the peripheral countries will be as strong as commentators expect. Which of course changes very little in your analysis.<br /><br />What I would say does change a little is that skilled immigrants are lured not only by the promise of better salaries but also the opportunity to build up human capital in the host country. Greeks abroad will often tell you that they were attracted to the host country's working culture, levels of professionalism and quality of management. These are, for the most part, positive externalities not priced into an employment contract. The host country has paid for nearly all of that and the home country has paid for none.<br /><br />If immigrants ever return to their home country, they take the less context-specific parts of this new human capital back with them, at a net benefit to the home country. In my mind, this (alongside any remittances) should compensate the home country for what it loses in the short and medium term, but it hinges on the assumption that people will return. <br /><br />- @lolgreece<br />Manoshttps://www.blogger.com/profile/01568922717477813566noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-22804176125354063522013-06-12T01:37:11.389+01:002013-06-12T01:37:11.389+01:00Another thing: the essay seems to imply that it...Another thing: the essay seems to imply that it's a bad thing if places get lower population than they have now. <br /><br />I don't think that as such there's a reason to say population levels should stay at whatever random level they currently are. Some places are pretty grim places to live and current population patterns often date from land-based economics that have ceased to be relevant a century or two ago. Should anyone live in the Baltics? It's pretty grim up there. It may make more sense to let it shrink and re-designate it as a nature reserve.<br /><br />Of course it might bankrupt local government in the process if they had debt structured to assume constant population. This problem is really fairly easy to solve going forward: make government debt investors explicitly carry the risk, e.g. make all debt GDP-linked (so the coupon and principal repayments halve if GDP/population halves). Fixed income with everything in nominal is a bit of a barbaric relic (which dates from when people didn't have computers to price more sophisticated products!) that really has no place in modern financial markets.cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-9319242128696731912013-06-12T01:19:25.346+01:002013-06-12T01:19:25.346+01:00To push property prices up for the locals, you nee...To push property prices up for the locals, you need the inbound migration to be above the outbound.<br /><br />The effect of someone leaving a country is the same as building a new house similar to the one they were occupying: there is +1 empty house added to the stock of available houses (square footage per inhabitant increases correspondingly). So in that sense it is wealth creating (and very green!).<br /><br />When there are strong emigration waves houses tend to become essentially free: if you have a city with 100k houses and 50k families, the lesser 50k houses will essentially be free (you might even get a stipend to move in and maintain it). This is sort of good for those who stay (people like free stuff!).<br /><br />Same for any infrastructure that is capital intensive and non-shareable: imagine a city with 1 MRI scanner, if half the population leaves, there's suddenly twice as many MRI scanning slots available per inhabitant.<br /><br />For incoming immigrating pensioners to reverse that effect, they need to occupy more than the house (or other infrastructure) that was vacated by the matching emigrants, that is be more numerous, or have a higher usage per person.<br /><br />If pensioners get houses built at their expense, it's a net benefit for the receiving country: the prices of the existing housing stock doesn't move (the supply and demand is unchanged: the same number of incumbent people are chasing the same number of existing houses) and if they give work to some local builders it means the locals get wealthier (money which wasn't in the country before gets to the locals).cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-76283074247407910792013-06-11T05:39:18.837+01:002013-06-11T05:39:18.837+01:00Your use of productivity is accurate...I used the ...Your use of productivity is accurate...I used the wrong word. I have not read your previous works, mostly just follow you on twitter (of which I don't know that I've disagreed yet) I do not make a moral issue out of labor flows. While the situation is southern eu is truely sad, I'm unable to view it as you do. (I'm also starting a new business while everyone else is afraid of loosing their jobs) Labor is revenue, however it's practical application determines how much income it provides. Honestly I quit my job and went on my own when they began to view me as an asset....at least for my production...I am not a capital good or expense...I'm a profit center and I don't view my fellow man as a capital good. Perhaps I don't follow your lingo correctly...but it appears you want people to be chattle.....anyway have a great day and I is likely I have missed your point completely.Jameshttps://www.blogger.com/profile/11569575426849897721noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-18665813311077390382013-06-10T14:18:13.329+01:002013-06-10T14:18:13.329+01:00Another excellent article Frances.
The UK is a pe...Another excellent article Frances.<br /><br />The UK is a perfect example of this. England should pay Wales for the huge migration of labour and skills to England, AND for the huge movement of elderly and sick people the other way.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-83465564599040800902013-06-10T09:55:33.734+01:002013-06-10T09:55:33.734+01:00Great essay, Frances.
I can't resist this, t...Great essay, Frances. <br /><br />I can't resist this, though: "Why would skilled immigrants come to a country from which people with the same skills were leaving? Surely they, too, would go to the higher-wage countries?"<br /><br />This describes New Zealand's situation. Young skilled and semi-skilled people are emigrating in large numbers, mainly to Australia, and they are replaced by skilled migrants from South and East Asia and from Southern Africa.<br /><br />Of course this can only happen because advanced countries restrict immigration. As soon as a large advanced country relaxes its immigration policy, the arbitrage opportunity will disappear and New Zealand will slide decisively out of the OECD. This despite its relatively high birth rate.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-79740053536085649852013-06-10T09:10:34.194+01:002013-06-10T09:10:34.194+01:00It isn't the actual wage balance that matters ...It isn't the actual wage balance that matters but the relative benefit. The cost of living in the peripheral EZ and EU can be a lot lower than in the richer countries - for property particularly. And as the UK has inflated property prices, this is true pretty nearly everywhere in the world. People will move when their perceived standards will improve and this will include the elusive 'quality of life'.<br /><br />So there is migration the other way which partly balances the numbers. Retiring or eco-people move to rural areas in Eastern Europe - even with no familial background - bringing some money and investment in property but, as you say, push prices up for locals. And eventually as they get older they end up a responsibility of the health and social services in their new countries. <br /><br />So the picture is even bleaker than you say as expensive countries like the UK not only import productive workers but export some of their liabilities in part because the pensions have become too low to live here.<br /><br />All for nothing - it makes it a good deal for us (and the Germans) but is indeed impoverishing our EU partners.<br /><br />I am not sure what the solution is. In fact I doubt there is a humane or politically tractable solution at all other than a complete federal state for the whole EU which will be over a lot of dead bodies - literally.John@TheMoneyPrinciplehttp://www.themoneyprinciple.co.uknoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-44241336132106417812013-06-09T17:29:25.317+01:002013-06-09T17:29:25.317+01:00Really?? You don't think the single market aff...Really?? You don't think the single market affects the price level in member states? I would have to disagree on that. Sticky wages are a partial explanation, but the fact is that wages have fallen considerably further in say Greece than prices have, so it certainly isn't a sufficient explanation. I don't buy your "exports are maximised" argument for the EU. If the EU is so far from economic equilibrium that people are migrating to where there is demand for their labour, goods & services will also migrate to where there is more demand for them.<br /><br />For import-dependent countries, it is the cost of labour in the supplying country that makes up the bulk of prices, not the domestic cost of labour. I remind you that most of the countries I am talking about - including the US and UK - run trade deficits and are dependent on imports for essential goods. Therefore I disagree that prices and real wages keep pace in these countries, as you seem to think. The evidence is that wages have fallen much further than prices. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-50705098162679936612013-06-09T17:27:19.140+01:002013-06-09T17:27:19.140+01:00The nub of your argument appears to be the stateme...The nub of your argument appears to be the statement "Failure of inward investment in the regions happens because of the migration of people, not the other way round"; and the assumption that labour mobility within the EU is now comparable to intra-country mobility and thus Krugman's 1991 model applies (though it deals with the flow between an agricultural periphery and an industrial core, rather than the flow of skilled labour between different industrial zones).<br /><br />You say "It is all a matter of economic geography (hence the Krugman link) exacerbated by unhelpful or even counterproductive policy". I would put more weight on the second half of that statement. <br /><br />The growth of London relative to the rest of the UK over the last 30 years was a political decision as much as the product of "economic geography" or secular trends in technology, notably the privileging of financial services over manufacturing. Migration from North to South was a consequence of deindustrialisation (i.e. the decline in investment), not the cause of it.David Timoneyhttps://www.blogger.com/profile/03568348438980023320noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-49594882018299427382013-06-09T17:18:33.544+01:002013-06-09T17:18:33.544+01:00I agree that devaluation (internal or not) causes ...I agree that devaluation (internal or not) causes a fall in real wages. But that is on the small side because the bulk of the cost of stuff consumed in most countries is made up of the cost of labour in that country. So if say wages and prices fall by say 50%, that sounds dramatic, but there is little effect on REAL WAGES in the country concerned. Thus not much cause for migration.<br /><br />In contrast, the significant effect (which is the desired effect) is the drop in the price of labour in EURO TERMS. That 50% drop would make exports from the relevant country much more competitive, which would solve the problem. If you remember, in my crude back of the envelope calculation in a comment in your previous post, I put the drop in real wages in the UK resulting from the 25% devaluation in 2008 at less than 6%. <br /><br />Against that, there is the fact that with an INTERNAL devaluation, unemployment has to be raised in order to get the price of labour and goods to fall in the country concerned, as you rightly point out. If that unemployment does its job quickly and efficiently, then the devaluation as such will cause minimal problems. But the big problem is that the job is not being done “quickly and efficiently”: as you put it, “what internal devaluation doesn't seem to affect much is the general price level.” Actually that should be “what austerity / deflation doesn’t seem to affect much is the general price level”, I think.<br /><br />As to why wages and prices aren’t falling much, I’d put that down to Keynes’s “wages are sticky downwards” point, rather than to your idea that firms in the periphery can sell to other countries. That is, for a given “exchange rate” between two Euro countries, and given level of recession or boom in other countries, exporters will already have maximised exports to the point where further sales are not profitable. <br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-69442274017403598232013-06-09T17:04:56.527+01:002013-06-09T17:04:56.527+01:00Yes, that's true. Skilled labour is more inter...Yes, that's true. Skilled labour is more internationally mobile. And I agree ppl have different reasons for leaving. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-15117918833276353152013-06-09T16:58:00.381+01:002013-06-09T16:58:00.381+01:00Perhaps skilled labour will to a larger extent mov...Perhaps skilled labour will to a larger extent move to countries with less compressed wages (UK)? Also, perhaps the reasons for emmigrating matters. Cleaners from Poland will move since they get paid more. IT peopke from Spain will move because they can't get hired in Spain.grodahttp://www.groda.eunoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-85037685917024037552013-06-09T16:52:52.473+01:002013-06-09T16:52:52.473+01:00I agree with you about technological factors and r...I agree with you about technological factors and resistance to change. However, like many you ignore the demographic timebomb and the highly-indebted nature of these states. The combination of migration with all of these factors is what makes their recovery impossible - not any one factor alone. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-9412402933878877482013-06-09T16:49:40.611+01:002013-06-09T16:49:40.611+01:00The evidence I've used is who is EMIGRATING fr...The evidence I've used is who is EMIGRATING from Southern Europe - which by and large is the young and skilled. That's not to say there aren't unskilled too, but the migration evidence is that the main movement is young professionals. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-23636318475632401852013-06-09T16:38:07.284+01:002013-06-09T16:38:07.284+01:00Your point is insightful.
However to your answer...Your point is insightful.<br /> <br />However to your answer to Ralph i disagree with this<br />"it is a discussion of the consequences of migration in an economic union where..." and "Migration of labour from low-wage to high-wage areas is an essential part of the internal devaluation process"<br /><br />In Greece the internal devaluation in not so clearly related with "migration of the young and skilled to other countries where there is more work and higher wages". <br />The main issue is first the inability of Greek state to develop innovative practices and to liberate economy and second the antilipsis to understand the importance of technology eg in industry which defines better the need for countries like Greece Spain Portugal to seek quality areas of economic activity.<br />The internal devaluation is not a "problem" but migration is not the ONLY point which "force" the internal devaluation as a consequence.<br /><br />The role of technology and why some countries do not endure better in a crisis.<br /><br />https://docs.google.com/file/d/0B39Y2UeDAWHYS2dWSFFaMWtXajA/edit?pli=1<br /><br />MSAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30239019684249751312013-06-09T16:25:07.446+01:002013-06-09T16:25:07.446+01:00I think you are wrong abou who is migrating. At le...I think you are wrong abou who is migrating. At least in Sweden a large fraction of EU immigrants are unskilled labour. The cost of travel is so close to zero that it really does not matter.Grodahttp://www.groda.eunoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-41618642024218813162013-06-09T15:31:58.334+01:002013-06-09T15:31:58.334+01:00Re the S&L crisis: turns out it was Krugman: h...Re the S&L crisis: turns out it was Krugman: http://krugman.blogs.nytimes.com/2012/06/17/what-a-real-external-bank-bailout-looks-like/Paul Antompietrinoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-8400362633681090972013-06-09T15:29:24.663+01:002013-06-09T15:29:24.663+01:00Hi Peter,
"Company towns" are a problem...Hi Peter,<br /><br />"Company towns" are a problem in the UK too. Sheffield is a case in point: it has not recovered from the loss of the steel industry and it is doubtful if it ever can. <br /><br />I do agree that Federal support does soften the effects of relative decline and can stem migration. But it doesn't eliminate either - as you note in relation to the Mississippi Delta among others. Fiscal transfers are no panacea. Reversing the flow of people and the decline of some areas requires policy decisions which are bound to be unpopular in prosperous areas. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-38119033115642896412013-06-09T15:24:08.827+01:002013-06-09T15:24:08.827+01:00Oh yes I do take effort into consideration. I'...Oh yes I do take effort into consideration. I'm concerned that you are confusing effort and productivity. For example, ten workers with scythes are nowhere near as productive as one worker with a combine harvester - but who is putting in more effort? The problem in this case is the availability of capital. Lack of capital reduces productivity for the same effort - but unless you understand this, workers can appear to be "lazy" because they are producing less than their better-equipped fellows. <br /><br />You are completely ignoring the point of this and my previous posts, which is the effect on the people who are NOT able to move - and indeed on the future of countries that are losing their young & skilled. <br /><br />The extent of migration in the EU - which I highlighted in my first post - suggests that the EU states are nowhere near equilibrium.<br /><br />My argument is that labour should be treated as capital, not revenue. Long-term migration when there is a falling birthrate depletes capital assets in much the same way as destruction of topsoil due to poor farming practices does. It makes recovery virtually impossible without external assistance. But perhaps you think it doesn't matter if some EU states become depressed, impoverished backwaters. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-61599935374690602692013-06-09T15:15:15.899+01:002013-06-09T15:15:15.899+01:00The US has always realized population = wealth. Ev...The US has always realized population = wealth. Every major city has at its core a local business community that works hard at promoting that city. Mayor Bloomberg of NYC is about as outstanding an example of this as there is. The places that decline in this country lack this; note in that article you cite that there are only a tiny number of private employers in that Delta county. <br />Other cities have declined due to having wound up as company towns. Detroit was so dominated by the carmakers that it became a company town; Rochester and Kodak is another example. Seattle was a company town for Boeing but escaped that fate due to the overwhelming success of Microsoft, which seems to have catalyzed an entrepreneurial burst there. Seattle might be an interesting contrast actually since Boeing would have had a relatively educated workforce, so that probably had a lot to do with Seattle escaping the fate of Detroit and Rochester. There is a long list of cities in the north that don't seem to have the wherewithal to come back, of course. Newark seems to have stabilized, but that may just be due to its position as an industrial suburb of NYC, although the mayor there, Cory Booker, is well-known and admired, and is now running for the US Senate. <br />Besides that, there's two differences between the US and the EU:<br /><br />1 - Social Security. There is no remittance question in the US because of Social Security, of course. Maybe the EU should think about a Europe-wide standard pension scheme?<br />2 - Fiscal transfer/banking union. Done to death already I know, but just one more interesting example: somewhere along the way (if I can find it I'll cite it) someone pointed out the US transferred, via the now defunct FSLIC and via the fund set up specifically to deal with that crisis, the RTC (Resolution Trust Corporation), billions of dollars to the Southwest back in the late 80s when we had a savings and loan crisis here. So the two are inseparable: one, the banking union, can lead to the kind of large fiscal transfers that keep a crisis from spiraling out of control and leading to the demographic hemorrhage (Ireland, Spain) you're writing about. Not a panacea, obviously, as Greece would have happened regardless, and over here in the US this does nothing for places like, say, Cleveland. Or the Mississipi Delta, for that matter. Just a way of showing that everything is connected.Paul Antompietrinoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-37563515208910069192013-06-09T15:07:41.556+01:002013-06-09T15:07:41.556+01:00If I read your conclusion correctly, you do not se...If I read your conclusion correctly, you do not seem to take effort into consideration. If labor is not equal between states then it would seem your conclusion is flawed. Perhaps the EU states are at equalibrium...in fact it appears this way in the case of Germany vs France. You may argue the southern states are out of balance, though it appears the have brought forward consumption with credit and are actually returning to balance. Labor in this case will migrate and should be allowed free access in line with capital flows. Labor is money and will flow where it is needed.Jameshttps://www.blogger.com/profile/11569575426849897721noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-35473950201475275052013-06-09T14:57:46.417+01:002013-06-09T14:57:46.417+01:00I specifically used the term "Kafkaesque nigh...I specifically used the term "Kafkaesque nightmare" about the possibility of restricting migration of skilled people, actually - not about the effects of migration. However, I am not the only person who thinks that the Baltic states are slowly bleeding to death. As is Detroit in the US, of course - which is now bulldozing apartment blocks because there is no-one to live in them. And Detroit is on the verge of debt default. You don't think migration has anything to do with that?<br /><br />There is no difference between the core/periphery problems in the UK and US and those in the EU. It is all a matter of economic geography (hence the Krugman link) exacerbated by unhelpful or even counterproductive policy. <br /><br />I disagree with you that migration from the regions in the UK is not a major problem. The growth of London versus the rest of the UK is only possible because people choose to work there and live there. Failure of inward investment in the regions happens because of the migration of people, not the other way round. <br /><br />I think we will have to agree to disagree about the effects of migration. Where the birth rate is already falling, I think migration of the young & skilled is a considerable problem and one that is not being addressed - probably because like you, policy makers think it is "no big deal" or even a good thing. <br /><br />My point about remittances was exactly that. The issue is the sustainability of fiscal finances in highly-indebted countries with a falling birthrate and experiencing substantial migration of the young & skilled. Remittances make only marginal difference to this. I did make that point in my second post, where I explained the reasoning behind the first post. I do think you should read both. <br /><br /><br />Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-11436216057009679972013-06-09T14:30:47.328+01:002013-06-09T14:30:47.328+01:00Frances, my quibbles with your position start with...Frances, my quibbles with your position start with your choice of language: "Kafkaesque nightmare" and "states that are slowly bleeding to death". I think you are overly-pessimistic. I don't think youth migration will lead to "terminal decline" for EU periphery states because a) it isn't that big a deal, and b) because there are countervailing forces. <br /><br />I'm well aware of the secular decline of peripheral regions relative to the core, such as the North of England versus London and the South East, but that is the product of a) persistent geography and b) variable politics. Migration is a relatively minor component (compared to, say, inward investment), and better seen as symptom rather than cause. Yes, it has a reinforcing effect, but not so great as to produce an inexorable "death spiral".<br /><br />You say: "Why would skilled immigrants come to a country from which people with the same skills were leaving? Surely they, too, would go to the higher-wage countries?" The answer is that the high-wage country might be their first choice, but that a lower wage country would still mean an improvement on their prospects at home, even if they are then pricing themselves into a job by taking an even lower wage than the natives are prepared to accept. Linguistic and cultural ease of integration, not to mention visa requirements, would also play a part (e.g. Brazilians might still prefer Portugal over Germany).<br /><br />Re remittances, you say: "the normal riposte to this - that migrant workers will of course send money back to their families - is inadequate". I agree. My point is that remittances haven't been significant for parental support for years, due to the introduction of state pensions in the periphery and the associated diversion of returning funds to property investment, and that's not about to change. In your <a href="http://coppolacomment.blogspot.ch/2013/06/the-movement-of-people-and-its.html" rel="nofollow">original post</a> you asked: "Are our family ties still strong enough for these highly-educated young people to send money back to the older generation that they leave behind". My point is that this is irrelevant, because it's marginal to pension affordability.<br /><br />You also say that it is unreasonable of me to assume "that the inexorable march of technology will somehow make an ageing and increasingly unproductive workforce more affordable for states that are already highly indebted and whose GDP is falling". What I actually said was that <a href="http://fromarsetoelbow.blogspot.co.uk/2013/06/from-huddled-masses-to-property.html" rel="nofollow">technology can offset this</a> growing burden, not that it would reverse it. My point is that the doom is over-done. I'm not suggesting that an ageing population is of no consequence.David Timoneyhttps://www.blogger.com/profile/03568348438980023320noreply@blogger.com