Cross posted from Alpha Sources
Since I have my hand on the data anyway based on my previous post I thought that I would present some more evidence on net migration in Europe. In this entry we will be looking at the trend in Italy, Germany and Spain. Essentially, the account of what are very different patterns of net migration flows into Eurozone countries constitute a painfully missing narrative I think in the whole debate on Eurozone imbalances. This should be readily clear through the presentation of the two figures below which plot net migration in Germany, Italy and Spain both in real values and per '000 population. I have a also uploaded the excel file which contain the migration data series so that you can play around yourself. Note the red line which is my crude estimate of net migration per '000 population based on the actual number of immigration inflow. Given the fact that that these countries are seeing very small if any positive natural population momentum and that as such immigration is the only source of population growth I feel that my estimate is not entirely off the mark.
Of course this should be seen as a first approximation since it does not take into account all the Eurozone economies as well as the aggregated net migration flow to the Eurozone economy. On that note, I have also excluded France since there seems to be somewhat of a 'lack of' data from the latter part of the 1990s. When I have dug them up I will include France too. However, since the economies presented above are three of the biggest economies within the Eurozone this should not be completely useless. As can readily be seen there is notable differences between the three countries. In general, Italy and Spain have received far more immigration than has Germany. Especially Spain stands out and in my opinion a large part of the Eurozone imbalances is to be discerned from the figures above. As such we can see that Spain has experienced a prolonged positive shock to its labour market which of course in part is what has driven the construction/housing boom and subsequent large external deficit. Even the difference between Spain and Italy is striking where the latter not to same extent has experienced the same magnitude of immigration. Note for example how immigration towards Spain has been very high for quite a long time relative to Italy which admittedly also has received an extensive inflow. It seems however as if the real question is what will happen to the already feeble Italian growth if the inflow of immigrants continue its trend decline in the future as is suggested by the trajectory of the figure. As for Germany, the trend is worrying indeed given the general human capital situation. It is clear as Edward also noted recently that Germany soon will need to revise its policy of immigration and the interesting thing will be to see how and to what effect.
In summary, this entry is merely to note the importance of cross country migration flow differentials in accounting for the Eurozone macroeconomic imbalances which materialize themselves in the difference of growth paths, domestic inflation, real exchange rates, external account balances and thus also net migration flows. As I complete my work on data compilation I will post more on the other Eurozone countries if only just to give a clear picture.