Income Disparities, Population and Migration Flows Over the 21st Century

Abstract

This paper provides worldwide projections of population, educational attainment, international migration and income for the 21st century. We develop and parametrize a dynamic, stylized model of the world economy that accounts for the key interdependencies between demographic and economic variables. Our baseline scenario is in line with the ‘high-fertility’ population prospects of the United Nations, assumes constant education and migration policies, long-run absolute convergence in total factor productivity (TFP) between emerging and high-income countries, and the absence of economic takeoff in Africa. It predicts a rise in the income share of Asia (from 38 to 59 percent of the world income) and in the demographic share of Africa (from 10 to 25 percent of the world population). However, over the 21st century, the worldwide proportion of adult migrants will only increase by one percentage point (from 3.5 to 4.5 percent). Half of this change is explained by the increased attractiveness of China and India; and the remaining part is explained by the increased migration pressure from Africa to Western Europe. Keeping its immigration policy unchanged, the 15 members of the European Union will see their average immigration rate increase from 7.5 to 17.2 percent. On the contrary, immigration rates will remain stable in the other high-income countries. Then, we assess the sensitivity of our projections to changes in migration policies, TFP disparities, fertility and education. The evolution of productivity in emerging economies and in Africa will have a drastic impact on the worldwide population size, income disparities and the migration pressure to the European Union. The world economy will also be drastically affected if TFP convergence is accompanied by a fall in migration costs to China and India. However, a large increase in the average European immigration rate is obtained under all the scenarios. More than ever, the management of immigration will become a major societal challenge for Europe.

Keywords: Income prospects, Population prospects, Migration, World economy, Growth, Inequality

JEL Classification: O, O15