## G20 background note on aging and migration

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### Global demographic trends (International Monetary Fund)
- Fertility and longevity
  - Fertility rates have declined across all regions over the last 50 years.
  - African Union (AU) members: fertility started above 6 births per woman in 1960 and declined to around 4.3 by 2020.
  - G20 emerging market economies: fertility fell steeply in the 1970s and to below 2 births per woman by 2023, converging to the same average rate as G20 advanced economies.
  - China and India: fertility declined from around 6 in the 1970s to 1 and 2, respectively.
  - G20 advanced economies: fertility as low as 1.2 (Italy, Japan) and 0.7 (Korea).
  - Declines below the replacement level of 2.1 imply long-run population shrinkage absent migration.
  - Life expectancy: G20 advanced economies rose from around 67 years in the 1950s to just under 82 years by 2023.
  - G20 emerging market economies and AU members experienced life expectancy increases of around 30 and 27 years, respectively; the AU average life expectancy remains 64 years, and the gap between G20 advanced economies and the AU decreased by 9 years.
- Dependency ratios and age structure
  - AU total dependency ratio peaked around 95 percent in the 1980s and declined to about 80 percent by 2020.
  - G20 emerging market economies: dependency fell from approximately 85 percent in 1960 to around 45 percent by 2010.
  - G20 advanced economies and the EU: ratios rose to roughly 55 percent by 2020.
  - Country examples in 2023: Japan 70 percent, France 63 percent, Korea 41 percent.
  - Old-age dependency ratios are growing in all regions except the AU.
- Migration patterns and refugee dynamics
  - Cumulative net immigration (1995–2020) in G20 advanced economies and the EU; G20 emerging market economies and the AU experienced persistent net emigration.
  - Some G20 members host large migrant stocks: over 40 percent of population in Saudi Arabia and close to 20 percent in Germany.
  - Migrants and refugees are usually younger than natives on average.
  - At end-2024, 3.8 million individuals were forcibly displaced in the Sahel region due to conflict and severe weather events.
  - Intra-AU migration has increased; migration from the AU to G20 advanced economies and the EU rose since the 2000s.

### Population outlook and regional heterogeneity (International Monetary Fund)
- Negative population growth in 2023: Bulgaria, Germany, Hungary, Japan, and Poland.
- Rapid population expansion (2023 growth rates exceeding 3 percent) in Chad, Democratic Republic of Congo, Niger, Saudi Arabia, and South Sudan.
- Sub-Saharan Africa: "half of all new entrants into the global labor force coming from sub-Saharan Africa by 2030."
- Job creation needs: "the continent will need to create up to 15 million new jobs annually."
- Niger example: population of "26 million people"; youth population share not expected to peak until "2058"; will require "650,000 new jobs annually for the next 30 years."
- Under the 2024 WPP baseline: global population peaks around the mid-2080s; working-age shares and population-growth contributions vary by region (G20 advanced economies and the EU turn more negative; AU remains positive but moderating).

### Demographics and productivity channels (International Monetary Fund)
- Aging effects on productivity and capital
  - Aging societies often face productivity declines due to diminished effort and innovation among older workers.
  - Total factor productivity (TFP) accounted for "more than half" of the decline in GDP growth and output per worker over time, partly due to increased misallocation of capital and labor among firms.
  - Empirical estimate (United States): "a 10 percent increase in the share of the population aged 60 and older results in a 5.5 percent drop in GDP per capita," with "two-thirds of this decline directly linked to reduced labor productivity and the remainder to slower employment growth."
- Fertility, life expectancy, and medium-term TFP/capital effects
  - "An increase in fertility rates of 1 child per woman is associated with an increase in TFP growth of about 1.3 percent 15 years later."
  - "A 1-year increase in life expectancy has been associated with slower capital accumulation by 0.1 of a percentage point 15 years later."
  - Channels: fertility and life expectancy influence future TFP growth, capital formation, savings, investment, and equilibrium interest rates.
- Offsets: healthy aging and technology adoption
  - IMF estimates: improved labor market outcomes for people aged "50 and older" could contribute about "0.4 percentage point annually to global GDP growth in 2025–50."
  - Aging explains "35 percent of the variation in robot adoption among OECD countries."
  - AI diffusion could mitigate headwinds but effects may be unequal across gender, age, and countries.

### Migration: economic impacts, remittances, and short-term trade-offs (International Monetary Fund)
- Migration benefits
  - Can ease labor shortages in destinations and relocate labor to higher-productivity locations ("double dividends").
  - Immigrants can raise TFP growth via faster innovation and workforce diversity, especially with skilled migration.
- Remittances (examples)
  - India: "3.3 percent of GDP."
  - Mexico: "4 percent of GDP."
  - Morocco: "8 percent of GDP."
  - Several low-income countries in the AU: remittances "above 10 percent" of GDP (examples include The Gambia, Lesotho, Liberia).
- Destination short-to-medium-term costs
  - Congestion of public services, infrastructure pressure, and rising housing costs before agglomeration gains materialize.
  - Productivity gains materialize faster when migrant skills are complementary to natives'; sudden large inflows can exacerbate social tensions.
- Origin country trade-offs
  - Remittances often smooth consumption; immediate productivity impacts depend on absorptive capacity.
  - Loss of skilled workers can create talent gaps in education, health, and technology.
- Transaction costs
  - Global average remittance fee is "6.6 percent" of the transaction; some corridors/providers fees are closer to "10 percent" and can be as high as "20 percent."

### Growth implications of shifting working-age demographics (International Monetary Fund)
- Recent trends
  - Contribution of the working-age population to growth has weakened across most regions, except the AU.
  - G20 emerging market economies: GDP per capita growth fell from an average of "4 percent" between 2008 and 2013 to under "3 percent" in 2023.
  - AU members: decline in per capita growth left average per capita real GDP close to "zero" as of 2023.
- Historical examples (1991–2023)
  - Japan: total GDP increased by "27 percent."
  - United States: total GDP increased by "126 percent."
  - China: economy expanded approximately "15-fold" from 1991 to 2023.
  - India: GDP increased by "700 percent" over three decades.
  - South Africa: more than "85 percent" of its doubling GDP (1991–2023) explained by expansion of the working-age population.
- Decomposition methodology and assumptions
  - GDP decomposed into: labor productivity (GDP per working-age adult), change in working-age population share (WAP share), and population growth.
  - IMF assumes "80 percent of total migrant population is of working age" for decomposition purposes.
- Regional decomposition findings (2010–23 and projections)
  - G20 advanced economies and the EU: output growth mainly driven by labor productivity; native demographic changes exerted negative influence but were partly offset by migrants.
  - G20 emerging market economies: labor productivity is main engine; positive native population dynamics provided substantial boosts; migration played a limited role.
  - AU: approximately "75 percent" of total output growth attributed to a substantial increase in the native population; labor productivity gains were relatively modest.
  - GCC: immigration critical to growth; migrants account for "75 percent of the population on average in Qatar and the UAE, and over 50 percent in Kuwait and Bahrain"; GDP growth driven largely by population increases with negative labor productivity growth in recent periods.

### Fiscal and public finance implications (International Monetary Fund)
- Higher total age dependency ratios reduce the share of population available for the labor force and can damp output growth.
- Aging strains public finances via a diminished tax base and higher social security and healthcare expenditures.
- Without substantive entitlement reforms, rising healthcare and social security costs are projected to place significant strain on public finances and could crowd out public investment.

### Policy recommendations to boost labor force participation, productivity, and manage migration (International Monetary Fund)
- Broad priorities
  - Enhance labor force participation and increase productivity.
  - Pro-natalist measures where needed to raise fertility rates.
  - Promote female labor force participation and remove barriers to female employment.
  - Active labor market policies to incentivize longer working lives, prevent pre-retirement participation drops, and attract immigrants.
  - In the AU, prioritize job creation to harness population growth.
  - Well-managed immigration to deliver a “double dividend” by expanding the working-age population and potentially boosting TFP in receiving economies.
  - Structural reforms and investments in digital and physical infrastructure and human capital.
  - Maintain international cooperation to manage cross-border spillovers from shocks, migration, and AI.
- Specific instruments to raise fertility and female labor supply
  - Paid parental leave, affordable childcare, tax benefits, and family allowances.
  - Increasing affordable housing supply to counter fertility declines linked to high housing costs.
  - Policies improving career-family compatibility: childcare policies, more equal division of childcare, flexible labor markets.
  - Subsidized or free childcare linked to higher fertility and women’s employment.
- Policies to encourage longer working lives
  - Changes to statutory retirement ages, reductions in early retirement benefits, and incentives to postpone or phase out retirement.
  - Projected statutory retirement ages vary: "62 years" in Luxembourg and Slovenia to "70 years or more" in Denmark, Estonia, Italy, the Netherlands, and Sweden (OECD 2023).
  - OECD average age for labor market entrants set to increase by "2 years" to "66.3 years" after 2022.
  - Upskilling and reskilling older workers and health prevention policies to reduce cognitive and health declines.
- Labor market and migration policy design
  - Prioritize public investment in infrastructure, housing, health, and education to absorb migration-related congestion; complement with domestic reforms where fiscal space is constrained.
  - Lower remittance costs to improve development gains.
  - Accompany migration with integration policies, active labor market policies, and measures to build public support and social acceptability.
- Complementary reforms for AI and productivity
  - Invest in human capital (STEM, digital skills) and digital infrastructure so countries can exploit AI benefits.
  - Enhance social safety nets, workforce training, and AI integration policies to mitigate inequality risks from AI adoption.
  - First-generation structural reforms on governance, business regulation, and the external sector to alleviate binding constraints in emerging market and developing economies.

*Prepared under the overall guidance of Aqib Aslam and the supervision of Andrea Presbitero; prepared based on information available as of June 16, 2025 (International Monetary Fund).*

### EXECUTIVE SUMMARY _____________________________________________________________________________ 3

### EXECUTIVE SUMMARY

### GLOBAL DEMOGRAPHIC TRENDS
- The IMF note finds that population growth, age structure, and migration jointly influence labor force size, savings and investment patterns, and demand for goods and services.
- Fertility and longevity
  - Fertility rates have declined across all regions over the last 50 years.
  - African Union (AU) members: fertility started above 6 births per woman in 1960 and declined to around 4.3 by 2020.
  - G20 emerging market economies: fertility fell steeply in the 1970s and to below 2 births per woman by 2023, converging to the same average rate as G20 advanced economies.
  - China and India: fertility declined from around 6 in the 1970s to 1 and 2, respectively.
  - G20 advanced economies: fertility as low as 1.2 (Italy, Japan) and 0.7 (Korea).
  - The decline of fertility rates in G20 advanced and emerging market economies below the replacement level of 2.1 implies long-run population shrinkage absent migration.
  - Life expectancy has risen across regions: G20 advanced economies rose from around 67 years in the 1950s to just under 82 years by 2023.
  - G20 emerging market economies and AU members experienced life expectancy increases of around 30 and 27 years, respectively; the AU average life expectancy remains 64 years, and the gap between G20 advanced economies and the AU decreased by 9 years.
- Dependency ratios and age structure
  - The average total age dependency ratio decreased for G20 emerging market economies and the AU but began rising in G20 advanced economies since the 2000s.
  - AU total dependency ratio peaked around 95 percent in the 1980s and declined to about 80 percent by 2020.
  - G20 emerging market economies: dependency fell from approximately 85 percent in 1960 to around 45 percent by 2010.
  - G20 advanced economies and the EU: relatively low and stable ratios until around 2000, then rising to roughly 55 percent by 2020.
  - Country examples in 2023: Japan 70 percent, France 63 percent, Korea 41 percent (old and total dependency context).
  - AU’s higher total dependency is driven by youth dependency due to higher fertility (e.g., Chad, Democratic Republic of Congo, Niger, Somalia with women giving birth to more than six children on average).
  - Old-age dependency ratios are growing in all regions except the AU.
- Migration patterns
  - Cumulative net immigration (1995–2020) occurred in G20 advanced economies and the EU; G20 emerging market economies and the AU experienced persistent net emigration.
  - Some G20 members host large migrant stocks: over 40 percent of population in Saudi Arabia and close to 20 percent in Germany.
  - Migrants and refugees are usually younger than natives on average.
  - G20 advanced economies remain important destinations in the past 5 years, particularly for migrants from G20 emerging market economies, though inflows have decreased over time.
  - Intra-AU migration has increased, and migration from the AU to G20 advanced economies and the EU rose since the 2000s.
  - Refugee and forced displacement dynamics: about two-thirds of refugees are hosted in neighboring countries; at the end of 2024, 3.8 million individuals were forcibly displaced in the Sahel region due to conflict and severe weather events.
- Regional demographic outlook
  - Advanced and emerging market economies face rapid aging as fertility falls below replacement and life expectancy rises; these trends are expected to accelerate.
  - Many AU economies retain younger populations but have begun gradual demographic transitions.
  - Population pyramids to 2050: G20 advanced economies and the EU show shrinking younger cohorts and expanding older cohorts; G20 emerging market economies show a narrowing base by 2050; the AU retains a wide base and rapidly expanding total population across age groups.

### DEMOGRAPHICS AND PRODUCTIVITY
- Aging effects on productivity and capital
  - Aging societies often face productivity declines due to diminished effort and innovation among older workers.
  - Aging can affect capital accumulation as savings increase and investment falls, driving interest rates lower.
  - Declining investment can directly reduce labor productivity via lower capital input, or indirectly reduce total factor productivity (TFP) through slower technological diffusion.
- Offsets to aging-related productivity declines
  - Automation, AI adoption, and healthier aging can help overcome labor shortages and mitigate productivity declines associated with aging.
  - Healthy aging contributes to increased labor force participation and enhanced productivity.

### GROWTH IMPLICATIONS OF SHIFTING WORKING-AGE DEMOGRAPHICS
- Recent trends
  - The contribution of the working-age population to growth has weakened across most regions, except the AU.
  - Real GDP per capita growth has declined for most economies since the global financial crisis.
  - G20 emerging market economies: GDP per capita growth fell from an average of 4 percent between 2008 and 2013 to under 3 percent in 2023.
  - AU members: decline in per capita growth left average per capita real GDP close to zero as of 2023.
  - Following post-crisis recovery, per capita growth in G20 advanced economies and the EU has also slowed.
- Projections and risks
  - The share of working-age adults and total population is expected to decline in most parts of the world.
  - Most AU members will continue to benefit from a demographic dividend, but its positive contribution to output growth is projected to diminish over time.
  - Projections may be too optimistic if they underestimate fertility decline and mismeasure migration, implying a more severe demographic drag on future growth.

### POLICIES TO BOOST LABOR FORCE PARTICIPATION AND PRODUCTIVITY
- Labor force participation and workforce size
  - Important strategies to tackle decreasing labor force participation include active labor market policies to boost workforce engagement and incentives for longer working lives.
  - Policies to better integrate immigrants and alleviate congestion are recommended.
  - Pro-natalist initiatives can be used to raise fertility rates where needed.
- Productivity and investment
  - Investment in new technologies and structural reforms can help boost productivity and long-term growth.
  - Specific reforms include encouraging female labor force participation, ensuring labor markets function efficiently, and implementing pro-competition policies.
  - Investment priorities include digital and physical infrastructure and human capital.
- Policy differentiation
  - Demographic shifts require differentiated policy responses across regions given divergent demographic paths and migration patterns.

*Prepared under the overall guidance of Aqib Aslam and the supervision of Andrea Presbitero; prepared based on information available as of June 16, 2025 (International Monetary Fund).*

### 1. G20 AE population pyramid  2. G20 EM population pyramid

### G20 background note on aging and migration

### Population trends and regional heterogeneity
- Negative population growth in 2023: Bulgaria, Germany, Hungary, Japan, and Poland.
- Rapid population expansion in some emerging markets and the AU: growth rates exceeding 3 percent in Chad, Democratic Republic of Congo, Niger, Saudi Arabia, and South Sudan.
- Sub-Saharan Africa labor-force entrants: "half of all new entrants into the global labor force coming from sub-Saharan Africa by 2030."
- Job creation needs: "the continent will need to create up to 15 million new jobs annually."
- Niger example: population of "26 million people"; youth population share not expected to peak until "2058"; will require "650,000 new jobs annually for the next 30 years."
- Population data basis: de facto population by five-year age group as of "1 July" of the year indicated; year "2050 data is probabilistic population projections. Median (50 percent) prediction interval." AE = advanced economies; AU = African Union; EM = emerging markets; EU = European Union.

### Labor supply, productivity, and aging
- Aging associated with declines in labor supply and productivity driven by "reduced effort and slower innovation among older workers."
- Total factor productivity (TFP) accounted for "more than half" of the decline in GDP growth and output per worker over time, partly due to increased misallocation of capital and labor among firms.
- Empirical example: "a 10 percent increase in the share of the population aged 60 and older results in a 5.5 percent drop in GDP per capita," with "two-thirds of this decline directly linked to reduced labor productivity and the remainder to slower employment growth" (United States estimate).
- Age composition effects: increases in the share of workers aged "40 to 49" are associated with higher productivity growth; workers’ earnings peak in their "40s."
- Aging societies reduce entrepreneurial activity (citations noted in the source).

### Fertility, life expectancy, and capital/TFP channels
- Fertility and TFP: an increase in fertility rates of "1 child per woman is associated with an increase in TFP growth of about 1.3 percent 15 years later."
- Fertility trade-offs: increases in fertility can decrease female labor force participation (FLFP) as women reduce labor supply after having a child; relationship varies across countries.
- Life expectancy and capital: "A 1-year increase in life expectancy has been associated with slower capital accumulation by 0.1 of a percentage point 15 years later."
- Channel summary: changes in fertility and life expectancy influence future TFP growth, capital formation, savings, investment, and equilibrium interest rates.

### Healthy aging, automation, and technology adoption
- Healthy aging can extend working lives and boost productivity: IMF estimates show improved labor market outcomes for people aged "50 and older" could contribute about "0.4 percentage point annually to global GDP growth in 2025–50."
- Automation and robot adoption: countries with more pronounced demographic aging were more likely to adopt robots; aging explains "35 percent of the variation in robot adoption among OECD countries."
- AI potential: "The widespread diffusion and adoption of AI could also mitigate the headwinds of the aging workforce," but effects may be unequal across gender, age, and countries, with emerging and developing countries less prepared to take advantage of AI.

### Migration: benefits, costs, and trade-offs
- Migration can deliver "double dividends" by easing labor shortages in destinations and relocating labor to higher-productivity locations.
- Productivity and innovation: immigrants can raise TFP growth via faster innovation and workforce diversity, especially with skilled migration.
- Remittances examples: remittances account for "3.3 percent of GDP in India, 4 percent in Mexico, 8 percent in Morocco and above 10 percent in several low-income countries, including in the AU (The Gambia, Lesotho, Liberia)."
- Destination economy short-to-medium-term costs:
  - Congestion of public services and infrastructure and rising housing costs before longer-term agglomeration gains materialize.
  - Productivity gains materialize faster when migrant skills are complementary to natives’; sudden large inflows can exacerbate social tensions.
- Origin economy trade-offs:
  - Remittances often used to smooth consumption; immediate productivity impacts can be limited and depend on absorptive capacity.
  - Loss of skilled workers can create talent gaps in education, health, and technology, hindering long-term service provision, innovation, and productivity.
- Policy implication: addressing social concerns associated with short-term costs of migration is crucial to capitalize on long-term gains.

### Growth implications of shifting working-age demographics
- G20 advanced economies: aging and shrinking working-age populations have dampened growth; migration inflows provided partial relief.
- G20 emerging markets: experienced a demographic shift that led to a sustained increase in the share of the working-age population—a "demographic dividend."
- Outlook: population growth expected to diminish globally, with population decline intensifying among some G20 advanced economies and the EU.

*International Monetary Fund, G20 background note on aging and migration.*

### 18.      Higher total age dependency ratios could dampen output growth given that a smaller

### Higher total age dependency ratios could dampen output growth given that a smaller share of the population is available to be part of the labor force

### Demographic impacts on growth and public finances
- Higher total age dependency ratios reduce the share of the population available for the labor force and can damp output growth (IMF).
- Aging places strain on public finances via a diminished tax base and higher social security expenditures as both younger and older generations tend to consume more public services (IMF).
- Without substantive reforms to entitlement programs, rising costs in healthcare and social security are projected to place significant strain on public finances and could crowd out public investment (IMF; see the April 2024 Fiscal Monitor).
- Fertility has a strong negative correlation with income per capita; countries with "lowest-low" fertility (total fertility rates of less than 1.3 births per woman) have seen rapid economic growth per capita after stagnation (Goldin 2025).
- Population aging can reduce labor supply, lower productivity, and lead to fewer innovations (Aksoy and others 2019; Jones 2022).

### Accounting for demographic shifts in growth measurement
- GDP growth and GDP per capita growth can obscure dynamics in GDP per working-age population (a proxy for labor productivity) and thus can be an unreliable proxy for productivity growth (Fernandez-Villaverde and others 2025).
- Example comparisons, 1991–2023:
  - Japan: total GDP increased by 27 percent.
  - United States: total GDP increased by 126 percent.
  - When adjusted for changes in the working-age population, Japan’s GDP per working-age adult rose nearly in step with the United States—difference of only 23 percent (IMF staff calculations).
- Output per hour worked is an alternative measure but has limitations: (i) reliable hours-worked data are unavailable or subject to measurement challenges (Eldridge and others 2022), and (ii) hours worked are endogenous and influenced by many factors (Fernandez-Villaverde and others 2025).

### Historical experiences: working-age population contributions to growth
- Some G20 emerging markets benefited from sustained increases in working-age population:
  - China: economy expanded approximately 15-fold from 1991 to 2023 alongside a significant increase in the working-age population; GDP growth and GDP growth per working-age population broadly kept pace (IMF staff calculations).
  - India: GDP increased by 700 percent over three decades; rise in the working-age population accounted for around half of the GDP growth.
  - South Africa: more than 85 percent of its doubling GDP (1991–2023) can be explained by expansion of the working-age population.
- Growth contribution of the working-age population has weakened over time for most advanced and emerging market economies:
  - Comparing average contribution of working-age population to GDP growth between 1990–2008 and 2008–23 shows shrinking workforce participation among G20 advanced and emerging market economies (IMF staff calculations).
  - Just over half of AU members experienced an increase in the average contribution of the working-age population to output growth since the global financial crisis.

### Historical vs projected population growth and long-run outlook
- Population growth is expected to continue to slow until at least 2050, weakening the outlook for GDP growth (IMF).
- Declines are expected to accelerate in many G20 advanced economies and the EU where population has peaked, including Germany, Italy, Japan, Korea, Poland, and Balkan countries (IMF staff projections).
- In the AU, population growth is expected to remain positive for most countries but grow less rapidly than in the previous two decades, with marked slowdowns expected in Central African Republic, Lesotho, Sao Tome and Principe, Zimbabwe (IMF staff projections).
- Under the baseline from the 2024 revision of the UN’s World Population Prospects (WPP), global population peaks around the mid-2080s; assuming labor productivity growth keeps the same pace as the past 15 years, projections suggest:
  - For G20 advanced economies and the EU: working-age population share will continue to contribute negatively to growth; population growth contribution will decline further and turn negative in the EU.
  - For G20 emerging markets: demographic tailwinds from population growth are expected to fade; total population and working-age share projected to decline as these economies align with richer-economy profiles.
  - For the AU: population and working-age share are projected to remain positive but at a moderated pace.
  - For GCC members: slower population growth and a shrinking working-age share are projected.
- Caveats: Fernández-Villaverde and others (2025) point to discrepancies between WPP estimates and official vital statistics that may imply the WPP baseline is overly optimistic; the 2024 WPP projects much lower fertility rates and higher old-age dependency ratios for some countries relative to 2019 vintage, notably China (IMF; World Economic Outlook, April 2025).

### Decomposition of GDP growth by components and regions
- GDP is decomposed into three broad components: labor productivity (GDP per working-age adult), change in working-age population share (WAP share), and population growth (see Box 1 methodology).
- Further decomposition separates native and migrant contributions; the IMF assumes 80 percent of total migrant population is of working age for decomposition purposes.
- Regional findings (2010–23 and projections):
  - G20 advanced economies and the EU: output growth mainly driven by labor productivity; native demographic changes exerted negative influence but were partly offset by increases in migrant population and migrant working-age share.
  - G20 emerging market economies: labor productivity is the main engine of growth; positive native population dynamics provided substantial boosts; migration played a limited role.
  - AU: approximately 75 percent of total output growth attributed to a substantial increase in the native population; labor productivity gains were relatively modest.
  - GCC: immigration was critical to growth; migrants account for 75 percent of the population on average in Qatar and the UAE, and over 50 percent in Kuwait and Bahrain; GDP growth driven largely by population increases split between natives and migrants; negative labor productivity growth highlights the dominant role of demographic change in the region.

### Policy recommendations to boost labor force participation and productivity
- Broad policy priorities (IMF):
  - Enhance labor force participation, increase productivity, and mitigate economic impact of demographic shifts.
  - Pro-natalist measures to help increase fertility rates.
  - Promote female labor force participation by identifying and reducing barriers.
  - Active labor market policies to incentivize longer working periods, prevent drops in participation before retirement, and attract immigrants (the latter three tend to yield results faster than fertility-raising measures).
  - In the AU, prioritize job creation to harness population growth.
  - Well-managed immigration can deliver a “double dividend” by increasing the working-age population and potentially boosting total factor productivity in receiving economies.
  - Structural reforms and investments in infrastructure and human capital to offset demographic burdens.
  - Maintain international cooperation given potential large spillovers from shocks and domestic policies.
- Specific instruments to raise fertility and female labor supply:
  - Paid parental leave, affordable childcare, tax benefits, and family allowances have been successful in several OECD countries (OECD 2024b; Lalive and Zweimüller 2009; Bick and Fuchs-Schündeln 2017).
  - Increasing supply of affordable housing can counter fertility declines associated with higher house prices and lack of access to housing (Dettling and Kearney 2014; Fazio and others 2024).
  - Policies that improve women’s career-family compatibility—childcare policies, more equal division of childcare, social norms, and flexible labor markets—can boost natality (Doepke and others 2023; Goldin 2014).
  - Subsidized or free childcare can lower the cost of having a child and free up mothers’ time; empirical evidence links public spending on childcare and early childhood education to both higher fertility and women’s employment (Olivetti and Petrolongo 2017; Bauernschuster and others 2016; D’Albis and others 2017; Luci-Greulich and Thévenon).
- Labor market improvements yield a double dividend:
  - Reducing underemployment and avoiding hysteresis effects after crises; improving overall labor market stability and flexibility can both increase labor participation and raise fertility, as women tend to postpone childbearing when permanent and stable jobs are hard to find (Ahn and Mira 2002; Del Bono and others 2012, 2015; Guner and others 2020).

*Source: International Monetary Fund, G20 background note on aging and migration (selected sections).*

### 27.      Increasing  female  labor  force  participation  can  help  offset some  of  the  decline  in

### g20-background-note-on-aging-and-migration - 27.      Increasing  female  labor  force  participation  can  help  offset some  of  the  decline  in

### Female labor force participation and aging
- Advanced economies have countered the effects of aging by substantially boosting labor force participation within age groups, primarily through remarkable increases in female participation (Chapter 3 of the April 2024 World Economic Outlook).
- Latin America has shown similar patterns, although participation rates have plateaued since 2010, with parenthood identified as a key driver of participation gaps (October 2024 Regional Economic Outlook for the Western Hemisphere).
- Saudi Arabia increased its female labor force participation by more than 10 percentage points over 5 years, reaching 35 percent by 2023.
- Policies and measures:
  - Family policies and the marketization of the care sector can help, since women tend to bear an unequal share of caregiving responsibilities for children (Buzard and others 2025) and the elderly (Skira 2015; De La Vega and Federman 2024).
  - Provision of public childcare has been highlighted as successful in increasing both female labor force participation and fertility in Scandinavian and European countries, Canada, Costa Rica, Korea and Singapore (Baker and others 2008; Gu and others 2024).
  - Japan’s 2000 Long-Term Care Insurance system, which covers the cost of formal care for the elderly, has been shown to significantly increase female labor force participation (Sugawara and Nakamura 2014).
  - Flexible work arrangements and remote work, retraining and reskilling of long-term unemployed women, and removing tax provisions that discriminate against secondary earners are recommended (Fabrizio and others 2020; Gu and others 2024; Chapter 3 of April 2024 World Economic Outlook).
  - Among emerging market and developing economies, boosting girls’ education, removing legal barriers to female labor participation, strengthening property rights for women, and increasing women’s access to finance can help close the gender gap (Duflo 2012; Fabrizio and others 2020; Gu and others 2024).
  - Low-income countries are advised to adopt gender-responsive human capital policies now because education investments take time to impact growth.

### Encouraging longer working lives
- Policies that encourage longer working lives can reduce the costs of aging by lowering the age dependency ratio and increasing the size and quality of the active labor force.
- Measures and evidence:
  - Changes to statutory retirement ages, reductions in early retirement benefits, and incentives to postpone or phase out retirement can support continued participation of older workers. Projected future statutory retirement ages vary from 62 years in Luxembourg and Slovenia to 70 years or more in Denmark, Estonia, Italy, the Netherlands, and Sweden (OECD 2023).
  - The average age in the OECD is set to increase by 2 years to 66.3 years for labor market entrants after 2022.
  - Improving the human capital of older workers through upskilling and reskilling programs can enhance productivity (Acemoglu and others 2022).
  - Health prevention policies can help prevent or slow cognitive and other health declines and address health inequalities (Chapter 2 of the April 2025 World Economic Outlook), reducing future health expenditures and counteracting slow output growth and public finance pressures (McDaid and others 2015).
  - Strengthening adaptability with flexible employment configurations and workplace changes to make jobs more age-friendly can encourage longer careers; Spanish survey data links flexible hours and low stress environments to higher average retirement ages (Barrela and others 2025).
  - Tackling biases and discrimination against older people is vital as they can contribute to early withdrawals from the labor force (Gaillard and Desmette 2010; Lamont and others 2015).

### Harnessing demographic dividends in high-growth populations
- Policy priorities to generate productive and quality jobs:
  - Boost productivity in the informal sector via education investment, well-matched skills training, better access to finance, and policies encouraging transition to formal employment (ILO 2025; OECD 2024a).
  - Create conditions for jobs growth in high-productivity sectors such as modern services and manufacturing, prioritizing horizontal measures like improved market competition and value-for-money infrastructure investments (André and Gal 2024; Moszoro 2024).
  - Support private business growth by (i) cutting red tape and curbing corruption, (ii) prioritizing infrastructure like electricity, internet, roads, and affordable public transport, and (iii) strengthening regional integration to ease the flow of goods and services and expand markets (October 2024 Regional Economic Outlook for Sub-Saharan Africa; World Bank 2023).

### Migration policies to alleviate demographic pressures
- Migration policies that support flows of younger workers to high age-dependency economies can help alleviate demographic pressures.
- Considerations and recommendations:
  - Address potential congestion from migration by prioritizing public investment in infrastructure, housing, and health and education services; where fiscal space is constrained, complement with domestic reforms to boost private sector development.
  - Openness to immigration is associated with an increase in per capita income in the destination economy and can yield growth dividends for origin economies if migrants’ surplus labor is effectively absorbed and diaspora spillovers are leveraged through sound policymaking and robust governance for investment in infrastructure, health, education, and other priorities (Batista and others 2025; Giuliano and Ruiz-Arranz 2009).
  - Policies should counteract negative impacts on labor supply in origin countries from skilled emigration by appropriate domestic policies (Carare and others 2024; Fackler, Giesing, and Laurentsyeva 2020; Leblang and Helms 2023; Williams 2024; Ortega and Peri 2009; Prato 2025).
  - Lowering the cost of remittances is important because high fees imply that a non-trivial fraction of remittances are “lost”; the global average fee is at 6.6 percent of the transaction, but for certain corridors and providers fees are closer to 10 percent and can be as high as 20 percent (World Bank estimates cited).
  - Migration policies should be accompanied by integration policies, infrastructure investment, and active labor market policies to address short-term congestion costs and maximize gains for immigrant workers and destination economies.
  - Building public support and social acceptability for migration policies is crucial given increasing political backlash despite positive economic effects (Albrizio and others 2024; Alesina and Tabellini 2024; Dustmann and Preston 2019; Mayda 2006; Chapter 3 of the October 2024 World Economic Outlook).

### Complementary reforms, AI, and productivity
- Countries should pursue complementary reforms to stimulate investment and TFP growth.
- Specific reforms:
  - Invest in human capital—such as increasing STEM graduates and promoting digital skills—to complement digital infrastructure investment and harness benefits of new technologies.
  - For AI, ensure infrastructure and skilled workforces so emerging market and developing economies can exploit benefits; evidence shows young, college-educated workers can transition to occupations where AI boosts productivity and wages, whereas non-college workers exposed to AI in Brazil are more likely to suffer income losses and downward labor mobility (Cazzaniga and others 2024a).
  - Policymakers should enhance social safety nets, invest in workforce training, and prioritize AI integration to mitigate risks that AI adoption could increase inequality in advanced economies (Cazzaniga and others 2024b).
  - “First-generation” structural reforms on governance, business regulations, and the external sector can alleviate binding constraints to economic activity in emerging market and developing economies (Budina and others 2023).
  - Good governance and the rule of law reduce uncertainty for firms and entrepreneurs; reduced barriers to firm entry and exit, trade openness, and financial accessibility can improve long-term productivity through better resource allocation and increased incentives for innovation.

### International cooperation
- International cooperation should remain a priority:
  - On migration, cooperation can help manage large unexpected forced displacement shocks and distribute short-term costs of hosting refugees more evenly across countries (Chapter 3 of April 2025 World Economic Outlook explores alternative scenarios).
  - On AI, countries should collaborate globally to enhance regulation, safeguard against risks and abuses, and foster public trust in AI technologies (Cazzaniga and others 2024b).

*INTERNATIONAL MONETARY FUND*

### References

### g20-background-note-on-aging-and-migration - References

### H3: Scope and themes of the referenced literature
- The references compile literature on demographics, migration, aging, fertility, labor markets, productivity, automation and AI, fiscal effects of migration, remittances, gender and family policies, entrepreneurship, and housing.
- Geographic and institutional coverage includes OECD countries, emerging market and developing economies, the EU, the US, Japan, China, India, Africa, and multi-country global analyses.
- Disciplines and outlets represented include economics (macroeconomics, labor, development, public economics), demography, public health, and policy institutions (IMF Working Papers, IMF Staff Discussion Notes, OECD Working Papers, NBER Working Papers, journals such as American Economic Review, Journal of Political Economy, Journal of Development Economics, Journal of Economic Growth, Review of Economics and Statistics, Journal of Population Economics, and others).

### H3: Key methodological and data sources cited
- Penn World Tables (version 10.01) used to calculate annual growth in capital (capital accumulation) and in TFP.
- World Development Indicators (World Bank) used to create lagged fertility and lagged life expectancy variables up to 15 years.
- Fixed-effects regressions with country fixed effects (γi) and error terms clustered at the country level are the primary empirical approach in Annex I.
- Specific regression specifications (variables and lag structure) used in Annex I:
  - TFP growth regression includes:
    - Lagged fertility as primary independent variable (FertLag k,i,t).
    - TFP level (TFPi,t-1).
    - Lagged TFP growth (TFPgrowth i,t-1).
    - Country fixed effects (γi).
    - Error terms clustered at the country level (εi,t).
  - Capital accumulation regression includes:
    - Lagged life expectancy as primary independent variable (LifeExpectancyLag k,i,t).
    - Capital level (Capitali,t-1).
    - Lagged capital accumulation (CapitalAcc i,t-1).
    - Country fixed effects (γi).
    - Error terms clustered at the country level (εi,t).
- Figure 10 plots coefficients α1,k and β1,k for every lag k between 1 and 15.

### H3: Representative cited works and quantitative identifiers (selected)
- Abel, G. J., and J. E. Cohen. 2019. “Bilateral International Migration Flow Estimates for 200 Countries.” Scientific Data, 6, pp. 82.
- Acemoglu, D., and P. Restrepo. 2020. “Robots and jobs: Evidence from US labor markets.” Journal of Political Economy, 128(6), pp. 2188-2244.
- Aiyar, S., C. Ebeker, and X. Shao. 2016. IMF Working Paper No. 16/238.
- Albrizio, S., B. Gruss, C. Ladreit, E. Huang, and H. Balima. 2024. IMF Working Paper No. 2024/217.
- Auclert, A., H. Malmberg, F. Martenet, and M. Rognlie. 2021. NBER Working Paper No. 29161.
- Barrela, R., P. Deb, G. Li, and C. Pizzinelli. 2025. IMF Working Paper No. 2025/030.
- Batista et al. 2025. Science, 388(6749).
- Bloom, D. E., D. Canning, and J. Sevilla. 2003. RAND Corporation.
- Cazzaniga et al. 2024b. IMF Staff Discussion Notes No. 2024/001.
- Gu, J., L. Kolovich, J. Mondragon, M. Newiak, and M. Herrmann. 2024. IMF Gender Note No. 2024/002.
- OECD publications cited include Pensions at a Glance 2023 and Society at a Glance 2024.
- UNHCR. 2024. Global Trends report 2024, Copenhagen, Denmark.
- World Bank. 2023. Africa’s Pulse: No. 28, October.

### H3: Annex I — Empirical design specifics and plotted results
- Data:
  - Annual growth in capital and in TFP: Penn World Tables (version 10.01).
  - Lagged fertility and lagged life expectancy variables up to 15 years: World Development Indicators (World Bank).
- Regression structure for TFP growth (for each fertility lag k):
  - TFPgrowthi,t = β0,k + β1,k ⋅ FertLagg,k,i,t + β2,k ⋅ TFPi,t-1 + β3,k ⋅ TFPgrowthi,t-1 + γi + εi,t
- Regression structure for capital accumulation (for each life expectancy lag k):
  - CapitalAcci,t = α0,k + α1,k ⋅ LifeExpectancyLagg,k,i,t + α2,k ⋅ Capitali,t-1 + α3,k ⋅ CapitalAcci,t-1 + γi + εi,t
- Plots:
  - Figure 10 displays the coefficients α1,k and β1,k for every lag k between 1 and 15.

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_Source: https://www.imf.org/-/media/files/research/imf-and-g20/2025/g20-background-note-on-aging-and-migration.pdf_