Question

1. Discuss any implications of the demographic patterns and migration for finance.

Answer 1

Implications of the demographic patterns and migration for finance:

Migrants are pushed out of some countries owing to the affected economic conditions or political unrest, whereas in some cases, they can be pulled into destinations with very good standard of living, high wages, good health care etc.

The implications for finance (both positive and negative) are as follows:

1. Migration often serves as a form of insurance for certain households and the desire to remit earnings from abroad may form part of the decision to migrate.

2. Migration costs are also central to the migration decision like transportation, visa fees etc.

3. Demographic factors such as age, education, marital status, and language impact one’s willingness to migrate.

4. The expected slowdown in population growth and labor force participation rates will have implications for long-run economic growth and the composition of growth

5. In addition to affecting the economy’s trend growth rate, demographics will likely affect the composition of growth by shaping aggregate consumption, saving, and investment decisions. Increased longevity means that people will need to save more over their working life to fund a longer retirement period.