Can Immigration Solve the Demographic Dilemma? – IMF F&D
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- Authors: Giovanni Peri
- Published: March 1, 2020
Summary of the argument
- Only net immigration can ensure population stability or growth in aging, advanced economies of the North; this requires forward-looking immigration policies that allow larger numbers of immigrants and consider their long-run impact rather than focusing only on short-term political costs.
- Historical trends show that between 1950 and 2010 the populations of the rich regions of the North increased through net immigration; since 1990 immigration has been the North’s primary source of population growth.
- However, international migration has not automatically acted as a demographic stabilizer across countries: lacking forward-looking policy, aging societies do not systematically attract more immigrants.
Demographic findings and key statistics
- Fertility in advanced countries currently stands at 1.7 and fell below replacement around 1980.
- In Europe, immigration accounted for 80 percent of the population growth between 2000 and 2018.
- In North America, immigration constituted 32 percent of population growth between 2000 and 2018.
- Analysis across 191 countries (fertility in 2000 versus net immigration rates 2000–2019) shows no correlation: countries with low fertility rates in 2000 did not experience higher immigration rates in the following 20 years.
- Within Europe, the relationship between fertility and immigration is, if anything, positive; several lowest-fertility countries (mostly in eastern and southern Europe) experienced low immigration rates (examples cited: Hungary and Poland).
- Age dependency ratio (people over 65 divided by those between 15 and 64):
- United States: .126 in 1950 to .223 in 2018.
- Japan: .09 in 1960 to .46 in 2018.
- Rapid aging has shifted typical support ratios from about 10 working people per retiree to just 3 or 4 in a few decades in some advanced countries.
Economic benefits of immigration
- Immigrants are usually younger than natives and a larger proportion are of working age, increasing the size of the labor force and countering natural decline in advanced economies.
- Increased immigration can reduce the growth of the age dependency ratio and allow a more gradual demographic transition.
- Several studies find immigrants have a positive fiscal contribution over their lifetimes, conditional on labor market integration and skill alignment:
- 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.
- Immigrants’ fertility helps sustain population levels:
- 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.
- From the perspective of sending countries (the South), higher migration to the North could reduce demographic pressures in high-fertility countries and generate benefits via remittances, return migration, and “brain gain.”
- Emigration rates are highest in intermediate-income countries and not in the poorest ones.
Why immigration has not automatically solved the demographic problem
- For migration to act as an automatic demographic stabilizer, people would need to move from young, fast-growing populations to aging, slow-growing ones; empirical evidence shows this channel is absent.
- Lack of forward-looking immigration policies and declining attractiveness of aging, economically stagnant societies limit immigration flows into low-fertility countries.
- Political and social resistance: Europe and the United States have tightened immigration policies in recent years amid growing skepticism toward immigrants.
Social and political dynamics
- Aging societies appear more averse to open immigration policies; older people have systematically more negative attitudes toward immigrants than younger people (Schotte and Winkler 2014).
- Paradox: older cohorts would benefit most from immigration (more sustainable pensions, less threat to jobs, services such as caregiving provided by immigrants).
- Generational differences matter: surveys suggest millennials and Generation Z in Europe have more positive opinions of immigration than older generations. Greater exposure to immigration among younger cohorts may lead to more pro-immigration policy preferences as they age and gain voting power.
Policy implications and recommendations
- Promote forward-looking immigration policies that:
- Allow larger numbers of immigrants, especially of working age.
- Reduce constraints on immigration and plan for future inflows.
- Focus on successful labor market integration and admission of sought-after skills to maximize positive fiscal and economic impacts.
- Recognize that immigration will not automatically resolve demographic decline; active policy choices are required to realize demographic and economic benefits.
- Consider the potential benefits to sending countries (intermediate-income countries in particular) through managed migration policies that leverage remittances, return migration, and “brain gain.”
Giovanni Peri, F&D Magazine, March 2020
Content in this bundle
- الطيور المهاجرة
- Eastern Europe: The Future of Aging Populations and Economic Growth – IMF F&D
- El canto del cisne del inmigrante ● Finanzas y Desarrollo ● Marzo de 2020
- Immigrés : le chant du cygne
- 借助移民扭转乾坤？ - 金融与发展 - 国际货币基金组织季刊 -2020年3月号·第57卷·第1期