## Can immigration solve the demographic dilemma — peri

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**Canonical URL:** [Can immigration solve the demographic dilemma — peri](https://www.imf.org/-/media/files/publications/fandd/article/2020/march/can-immigration-solve-the-demographic-dilemma-peri.pdf)

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### Demographic context and role of immigration
- Fertility in the rich regions of the North currently stands at 1.7 and fell below replacement around 1980.
- Between 1950 and 2010, the populations of the rich regions of the North increased through net immigration, and since 1990 immigration has been the North’s primary source of population growth.
- In Europe, immigration accounted for 80 percent of the population growth between 2000 and 2018, while in North America, it constituted 32 percent in that same period.
- Only net immigration can ensure population stability or growth in the aging advanced economies of the North—and this will happen only if forward-looking immigration policies allow larger numbers of immigrants and consider their long-run impact.

### Empirical patterns across countries
- Analysis across 191 countries shows no correlation between the fertility rate in 2000 and subsequent net immigration rates from 2000 to 2019 (net inflow of foreign born divided by population in 2000). Countries with low fertility rates in 2000 did not experience a larger immigration rate in the following 20 years.
- Focusing on Europe, the relationship between fertility and immigration is, if anything, positive: several of the lowest-fertility countries (mostly in eastern and southern Europe) experienced low immigration rates between 2000 and 2019.
- The absence of a negative correlation implies international migration is not acting automatically as a demographic stabilizer at the country level; policy must actively shape migration patterns to offset demographic decline.

### Economic and fiscal effects of immigration
- Migrants are usually younger than natives in the receiving country; a larger proportion of immigrants are of working age and thus increase the size of the labor force, countering natural decline.
- Immigrants can reduce the age dependency ratio (the number of people over 65 divided by those between 15 and 64), which is growing fast in advanced economies.
- Age dependency ratio examples:
  - United States: increased from .126 in 1950 to .223 in 2018.
  - Japan: increased from .09 in 1960 to .46 in 2018.
- More immigration, especially of young working-age people, would help slow the growth of the age dependency ratio and allow a more manageable demographic transition.
- Evidence on fiscal contributions:
  - Several studies find immigrants have a positive fiscal contribution over their lifetimes, conditional on integration and skill matching.
  - In the United States, the average lifetime fiscal contribution of an immigrant who arrived in the last 10 years has been calculated at $173,000.
- Fertility differences:
  - United States total fertility rate of natives: 1.76 children per woman in 2017.
  - United States total fertility rate of immigrants: 2.18 children per woman in 2017.
  - The presence of immigrants helps keep U.S. fertility at levels closer to replacement.

### Effects for sending countries (the South)
- Policies allowing higher migration to the North would help reduce demographic pressures in high-fertility countries.
- While "brain drain" could have negative effects, remittances, return migration, and “brain gain” are channels of potential beneficial effects.
- Research shows emigration rates are highest in intermediate-income countries and not in the poorest ones; people trapped in subsistence lack liquidity to invest in migrating or to learn about outside opportunities.
- Increased immigration to the North would likely benefit intermediate-income sending countries whose people are more able to take advantage of migration opportunities.

### Political economy and public attitudes
- Europe and the United States have tightened immigration policies in recent years and shown growing skepticism toward immigrants.
- Aging societies appear more averse to open immigration policies; older people have systematically more negative attitudes toward immigrants than younger people.
- This aversion is paradoxical because older cohorts stand to gain from immigration (more sustainable pension systems, non-competition for many jobs, increased provision of services such as caregiving).
- Negative attitudes may reflect generational differences and relative lack of exposure to immigrants among currently older generations. Surveys in Europe suggest millennials and Generation Z have more positive opinions of immigration than older generations; changing cohort composition could increase political support for more open immigration over time.

### Policy implications and recommendations
- Increase the number of immigrants allowed, reduce other constraints on immigration, and plan for future inflows to realize demographic and economic benefits.
- Adopt forward-looking immigration policies that consider long-run impacts rather than focusing only on short-term political costs.
- Support immigrant integration into labor markets and admission policies that attract sought-after skills to enhance fiscal and productivity gains.
- Recognize potential benefits for sending countries, particularly intermediate-income countries, through remittances, return migration, and brain-gain dynamics.

*Giovanni Peri, “Immigration can solve the demographic dilemma—but not without the right policies” — Finance & Development, March 2020*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2020/march/can-immigration-solve-the-demographic-dilemma-peri.pdf_