Selected Issues Papers

Recent immigrants have been successfully absorbed into the Lithuanian labor market and legislative amendments have enabled easier migration for high-skilled workers despite the reduction of non-EU workers quota in 2025. The analysis in this note shows immigration can play a role in mitigating the impact of aging on labor force and support potential output growth. Policies should continue to focus on integrating migrants in the most productivity-enhancing way possible while allowing the participation of foreign professionals in those sectors with the largest shortages. At the same time, given the uncertainty about immigration developments, addressing remaining constraints limiting capital deepening and TFP growth would be crucial.