Adios Espana! The Talent Outflow From Spain

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Spain appears to be ever closer to asking for outside financial aid to help it recover from a deep recession and cope with severe unemployment. The interest rate Spain must pay to finance its steep budget deficits remains too high to permit a sustainable economic recovery. And some of its banks still need to be bailed out due to a huge portfolio of poor loans. The world is anxiously watching as Spain faces a myriad of financial, economic, and political challenges.

But less known is the effect the crisis is having on the movement of people in and out of Spain. Beginning in the late 1990's, Spain's booming economy attracted immigrants in record numbers, especially from the countries of Spanish-speaking Latin America. Since 2007, however, departures from the country have been gaining on arrivals, overtaking them in 2011. The short time in which this reversal has taken place is truly amazing. Clearly, sluggish economic growth and alarmingly high unemployment are not good ways to keep people in a country.

Even more striking is the fact that many Spaniards appear to have lost confidence in the government's ability to improve the economy any time soon. Starting in 2008, more Spaniards departed than returned to the country. This net exodus continued even as the number of arrivals started increasing. Though the number of Spaniards returning to their home country reached a six-year high in 2011, the number of those departing rose by nearly 70 percent from 2010 to 2011, creating the largest net outflow of Spaniards in recent history.

Although Spaniards only accounted for 1.2 of every 10 individuals who left Spain in 2011, the number of net departures by Spaniards (20,484) was only exceeded by net departures involving African (34,755) and South American (42,117) nationals. Individuals from these two continents accounted for the largest group of non-E.U. citizens immigrating to Spain.

So, where are these people going once they leave Spain? One might think a likely spot would be Germany, which has been performing so much better than its other eurozone neighbors. The Federal Statistics Office of Germany does indeed report a large 52 percent increase of non-German immigrants from Spain between 2010 and 2011, from 13, 607 to 20, 672. However, in terms of absolute numbers, the top three destinations for those who emigrated from Spain in 2011 were Morocco (56,992), Romania (52,477), and Ecuador (28,867). We believe that the vast majority of these individuals are returning home. However, some migrants may not return home but move on to a third country where there are better job prospects.

What are the ten most popular destinations in 2011 for those who leave Spain who did not return home? France tops the list, with the United Kingdom and Germany ranked a relatively distant second and third. Argentina, Ecuador, Venezuela, and the United States also received many migrants from Spain who were not their nationals. These numbers are based on the assumption that each destination country receives all the individuals that Spain reports departing of that country's nationality. (This seems to be a reasonable assumption for the advanced economies. In the case of Germany, for example, Spain reported a total of 7,225 German emigrants in 2011, while Germany estimated that there were 7,468 of its nationals returning from Spain in the same year, which is a fairly close match.)

At the same time, we estimate that at least 17,417 African nationals did not return to Africa and at least 5,747 Asian nationals did not move back to Asia. These are among those non-home-bound persons departing Spain.

How many of the thousands of international migrants fleeing Spain will end up in the United States? In 2008, at the beginning of the global financial crisis, there were still roughly 213,000 migrants from South America moving to Spain. Just three years later, the number had shrunk to about 90,000, a decrease of 58 percent. Over the same period, the number of South Americans exiting Spain had climbed six-fold, to slightly more than 132,000 in 2011, from approximately 19,000 in 2008. Since data indicate that Spain and the United States are fairly close alternatives as destinations for migrants from South America, the U.S. may soon be experiencing intensified immigration pressure coming from our neighbors to the South, in search of an economy that provides greater employment opportunity.

I-Ling Shen is a Senior Research Analyst at the Milken Institute, specializing in population economics.  James Barth is a Senior Finance Fellow at the Milken Institute.  

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