The changing face of Latvian emigration and the changing face of Latvia

March 1, 2012
AmCham Outlook on demographics

Mihails Hazans
University of Latvia Institute for the Study of Labor (IZA, Bonn)

Dynamics of Latvias population, natural increase and net migration, 2000-2011

140 120 100 1000 80 60 40 20 0
2000-2003 2004-2008 2009-2010 2011

Net emigration Natural decrease

2500 2400 1000 2300 2200 2100 2000 1900 1800 2000 2004 2009 2011 2012
Population on January 1

Population change in the Baltics,

2000-2011 (% of the inititial population)

Birth & Death Rates (per 1000):

The Baltics vs. The Old Europe, 1970-2011

Net migration (per 1000):

The Baltics vs. The Old Europe, 1970-2011

Most emigrants are young...

About 80% of recent (2009-2011) emigrants from Latvia are younger than 35 Hence, the remaining population is aging faster than each of us... ...and faster than population of the countries which host our emigrants

Population by age: 2011 vs. 2000

Labour Supply in Latvia: Back-of-the-Envelope Forecast

Economically active population
1040

1020

1000

980 1000

960

940

920

900

880 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Three emigration waves

Pre-accession: 2000-2003 Post-accession: 2004-2008 Crisis: 2009-2011

(i) 2000-2003: Personal initiative and effort

High unemployment, low income large emigration potential (2000: ~15% of active pop.) Emigration potential was reduced by
Hopes for a better life in Latvia Institutional obstacles for labour migration Difficulties related to information and job search High monetary and psychic costs In sum: rather high de facto thresholds with respect to own-initiative, access to information, and willingness to accept risk Comparative advantage for university graduates A higher than average proportion of ethnic minorities A high degree of geographical diversification of migration flows

(ii) 2004-2008: Institutional and market forces

Migration-friendly institutional changes along with technical progress reduced all kinds of migration costs Emigration boom growing diasporas, migrant networks, fallling communication and transportation costs further reduction of migration costs Emigrants self-selection in terms of human capital was driven mainly by expected gains in terms of income and working conditions; these gains were, on average, larger for persons with secondary or lower education Migration flows to a large extent re-directed towards the United Kingdom and Ireland (and, less so, Sweden) The proportion of non-Latvians (especially non-citizens) among emigrants declined In the second half of the period, the intensity of emigration declined due to strong economic growth in Latvia, while return migration increased

(iii) 2009-2011: Lost jobs and lost hopes The intensity of emigration from Latvia increased The role of push factors (especially unemployment & wage cuts, but also lack of prospects, loss of hopes and uncertainty of Latvia's development path) in shaping migration flows increased The role of host country's social protection system increased among pull factors Migrants are more oriented towards permanent emigration and more often move as whole families The proportion of the highly educated among emigrants increased significantly and exceeded corresponding proportion among stayers The proportion of individuals oriented towards own business among emigrants increased The proportion of ethnic minorities (especially those with Latvian citizenship) among emigrants increased.

Emigrants from Latvia (aged 22+) by completed education at the end of 2010
100% 80% 60% 40% 20% 0% 2000-2003 2004-2008 2009-2010 Continental Europe Latvian/Latvian Minority/Latvian Minority/Other Other/NA Ireland Total UK 31 24 32 23 36 25 15 28 30 36 27 Tertiary Secondary Basic or less NA

Period of moving

Ethnicity and citizenship

Host country

Emigrants main occupation, by education level, host country & period of moving
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000-2003 2004-2008 Below Secondary 2009-2010 Secondary Other/NA Tertiary Ireland Continental Europe Total UK

Other/NA Job seeking Studies/Training Self-employment Paid work not using one's qualification Paid work using one's qualification

Education

Host

Time of departure

Estonian and Latvian (net) emigration flows by direction and period, 2000-2010
100% Other 80% FI FI FI FI FI

60%

Nordic counties

40% Western Europe

20%

0% 2000-2003 2004-2005 2006-2008 2009-2010 2000-2010 2000-2003 2004-2008 2009-2010 2000-2010 Ireland

Estonia

Latvia UK

Latvian emigrants' plans to return within 6 months and within 5 years, 2011/01
Ethnicity and citizenship Minority/Other Minority/Latvian Latvian/Latvian Tertiary Secondary Basic or less Other/NA Continental Europe Ireland UK 5 - 11 years 3 - 5 years 2 - 3 years 1 - 2 years Less than 1 year Total 0% 5% 10% 15% 20% 25% 30% 35% 40%

Elapsed duration of stay abroad

Host country

Education

Plans to return within the next 6 months Plans to return within 5 years (but not within 6 months)

Emigration plans of Latvias residents aged 18-65, early 2011

Emigration plans of Latvias residents aged 18-65, early 2011

Main findings (1)

In 2000 2011, Latvia has lost at least 230 thousand persons due to [mostly unregistered] emigration Latvia's society is much older than we used to think and is aging faster than societies in the countries of the old Europe Latvias birth rate is lower but death rate higher than in Estonia, Lithuania, the UK, Ireland and Norway; and it is getting worse

Main findings (2) from surveys conducted in early 2011

Just 8% of emigrants plan to return within six months. In a longer perspective (within five years) about 20% might come back The propensity to emigrate due to only non-economic reasons among citizens of Latvia does not depend on ethnicity and is larger than among non-citizens Overall propensity to move abroad during the crisis is larger among non-Latvians (especially those holding Latvian citizenship) The proportion of the highly educated among emigrants increased significantly and exceeded corresponding proportion among stayers. Students are strongly over-represented among the potential emigrants. The brain drain risk becomes not negligible

Policy recommendations
Expert assessment should apply to any significant policy change, to avoid increasing motivation to emigrate among large groups of population State and municipalties should engage in strengthening the links with the emigrants Liberalise [selective] immigration EU-wide compensation mechanisms EU-wide demographic stimulus (means tested child benefit floor)

Sources:
Hazans, M. Who lives in Latvia today? A snapshot of real demographic situation. Public presentation, University of Latvia, 12.09.2011, http://www.lu.lv/zinas/t/7594/ Hazans, M (2011). The changing face of Latvian emigration, 2000-2010. In: B.Zepa and E. Klave (eds), Latvia. Human Development Report 2010/2011: National Identity, Mobility and Capability. Riga: Univ. of Latvia Press: 70-91 Hazans, M (2012). Selectivity of migrants from Baltic countries before and after enlargement and responses to the crisis, in Bela Galgoczi, Janine Leschke and Andrew Watt (eds). Intra-EU Migration in Troubled Times: Skills Mismatch, Return Migration and Policy Responses. Farnham, UK: Ashgate (forthcoming). Ad hoc calculations