The Bureau of Economic, Entrepreneurial and Public Policy Studies (B2E2PS) of the School of Economics and Management of the University of Porto (FEP) presents the 3rd and final chapter of the 1st issue of the publication ‘Economia & Empresas’.

The study uses the economic model from the previous chapter to estimate the evolution of the population and its components, the natural growth rate (the difference between the birth rate and the death rate) and the migratory growth rate (the immigration rate minus the emigration rate), in the countries of the European Union in 1999-2022.

The estimation results, together with the analysis of partial correlations, show that emigration in EU countries since the beginning of the millennium is mainly of immigrant people – attracted by higher initial living standards and economic growth dynamics, the explanatory variables – who then left when they found better opportunities in other countries in the period analysed, for the same economic reasons.

On the other hand, the emigration of residents for economic reasons (with less relative weight) occurs above all in countries with low economic growth and initial standard of living, in addition to the traditional, less significant effect of leaving for neighbouring countries with a similar standard of living (high or low) and associated economic growth.

‘In Portugal, weak economic growth and a low initial standard of living explain the emigration of a third of our young people,’ emphasises FEP’s Dean, Óscar Afonso.

FEP’s study contradicts, in a quantified way, the myth that immigrants ‘push’ Portuguese nationals out of the labour market and into emigration. It also stresses that the integration of immigrants sustainably expands the internal market and thus investment and employment opportunities for all, in addition to their positive contribution to Social Security, which has been pointed out in several previous studies.

The chapter also reveals that immigrants tend to stay longer (roughly twice as long, on average) in countries with a high starting relative standard of living compared to countries with higher economic growth.

‘In Portugal, we need to take advantage of the phases of greatest growth, such as the current one (driven by temporary factors such as the RRP and the tourism boom) to retain immigrants attracted by this dynamic before it runs out,’ adds Óscar Afonso.

The decomposition of Portugal’s demographic dynamics in 1999-2022 revealed favourable non-economic factors (other than those estimated) in most of the components, with the exception of the immigration rate. In order to improve these factors and the dynamics, it is proposed to:

  • Restore the quality of the SNS (which will explain mortality below the EU due to non-economic factors in the period) with more investment and better management; and reinforce results with a strong commitment to health literacy and prevention, with the proposal to create a special tax on sugar, salt, artificial preservatives and harmful sweeteners in processed foods, to be earmarked for the SNS;
  • Strengthen the capacity to retain immigrants, namely by training them and strengthening the Agency for Integration, Migration and Asylum (AIMA);
  • Counteract the weak capacity to attract immigrants given our peripheral position in the EU (for example, by establishing agreements with PALOP countries and others), which will also help to reverse the low birth rate in Portugal, since the fertility rate of immigrants is higher than that of residents.

Without policy changes, the predicted annual economic growth of 1.11 per cent until 2033 causes an estimated fall in the population of 5.8 per cent, well above the loss of 2.1 per cent projected in the 2024 Ageing Report, which does not use the economic model employed. However, if Portugal grows by 3% a year through structural reforms – the minimum to reach half of the EU’s richest countries by 2033 – the rise in the average immigration rate to 1.321% would compensate for the negative natural balance and stabilise the population. This is an immigration rate above the peak of 1.13 per cent reached in 2022.

‘A more dynamic economy and a higher standard of living presuppose that Portugal organises itself to welcome an even greater influx of immigrants in the future in a controlled manner, including mechanisms linked to economic evolution, such as the prior requirement of a work contract and the consultation of companies‘ needs for workers, accompanied by adequate supervision,’ concludes FEP’s Dean.

More information about this study and the Bureau of Economic, Entrepreneurial and Public Policy Studies (B2E2PS) of FEP is available here.