Global trend: multicultural societies due to immigration
Goldman Sachs’s Global Economic Weekly published a summary of “Four Demographic Trends that Will Shape the 21st Century.” The four trends: the birth rate of advanced counties will move slightly up to meet the replacement rate of 2.1 children per household; baby boomers will retire throughout the advanced economies, this pushing way up the percentage of the population over 65; India and Africa will assume a larger share of the world population; and “immigration creates more multicultural societies.”
Here is the fourth trend:
Trend #4: Immigration Creates More Multicultural Societies
One of the defining trends in recent years has been increased immigration flows, mainly from developing to advanced economies. About 12% of the OECD population was foreign-born in 2006, up from 10% in 2000. In Canada and Australia, this figure is now above 20%. Over the past decade, net migration on average has accounted for about 50% of the population growth in the OECD, and close to 100% in countries like Spain and
For the US, high rates of immigration are nothing new. The percentage of the population that was foreign-born in 2008, estimated at about 13%, was slightly below the peak of 15% in the first few decades of the 20th century. However, the current immigration boom is different from the one in the early 20th century in a number of respects.
First, the current generation of immigrants has arrived in the US from a much wider set of countries than in the past. Second, partly reflecting the fact that there are now more
restrictions on legal immigration, there are currently many more undocumented workers living in the US. While estimates of illegal immigration are hard to come by, the Pew Hispanic Center estimates that there are about 12mn undocumented people in the US, or about 30% of the total foreign-born population.
Partly as a result of immigration, the populations of many advanced economies are set to become significantly more diverse. For example, the US Census Bureau estimates
that designated minorities groups, which now account for roughly one-third of the US population, will account for half the population by 2042. By 2023, minorities will
account for 50% of children born in the US. And by 2039, minorities will comprise half the working age population, up from 34% currently.
As we discussed in a recent Global Economics Paper No. 168, “Immigration and the North American Economy”, the recent wave of immigration to the US should boost the overall rate of growth for the economy. And as our US equity strategists outlined in a report in October 2007, “US Hispanization: Long/short strategies”, the growth of the Hispanic population ñ which is expected to increase from 46.7mn in 2008 (15% of the US population) to 132.8mn in 2050 (30% of the US population) offers investors a number of compelling opportunities.
As with previous immigration waves, the full benefits from immigration will be realised only if immigrants and their children acquire the requisite skills to prosper in today’s knowledge-based economy. The pattern in the early 20th century was generally one where children of immigrants quickly absorbed new skills and achieved household incomes that were well above that of their parents and, in many cases, well above the national average. As the box above discusses, while there are grounds for optimism, the educational attainment of immigrant children still lags that of native-born children
in many OECD countries. As such, improving educational outcomes will be vital to maximising the gains from immigration.