Population Aging Is Here. Immigration Can Offer Half an Answer.

cross-posted from: https://mander.xyz/post/56596778

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Here is the study: Population Aging Is Here. Immigration Can Offer Half an Answer (pdf)

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Population aging has become a defining challenge of our time and is galloping ahead faster than predicted. In China, births have now fallen to levels not seen since 1949. But many countries are getting old before they grow rich: Comparable declines are being seen in Latin America, the Middle East, and North Africa. A shrinking workforce means less money to go around and increasing difficulties shouldering the costs of covering health care and pensions for retirees.

In many fast-aging, wealthier countries, immigration has long been a demographic salve. But immigration will not fix aging in the long run; holding worker-to-retiree ratios steady through migration alone would require a 75 percent increase in the combined population of Organization for Economic Cooperation and Development countries by 2050.

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While immigration cannot solve population aging, it can be a useful demographic and economic lever—if it is employed more effectively. One needed change is a shift in perspective toward seeing migrants as families rather than single applicants. A trailing spouse who cannot access the labor market, or a child failed by an underfunded education system, represents foregone fiscal value that directly undermines the demographic dividend immigration is meant to deliver. Such examples point to the increased importance of measures that support the integration of newcomers and their families and that unlock underused human capital, including among previous cohorts of migrants.

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Immigration is far from the only strategy that can mitigate demographic decline—and it is certainly not a complete one. Migration can grow the population, but its effects on a population’s age structure are more limited than often thought since migrants themselves also age. Importing enough workers to counteract swelling numbers of pensioners implies year-on-year population expansions that are not practical or politically viable. As a result, pension and tax policy has tended to overlook migration as a major tool and instead focus on other levers such as raising the retirement age or increasing productivity.

This is an oversight. Decisions taken about immigration do not exist in a vacuum and have a cascading effect on other levers, from business strategies (hire more boots on the ground or reconfigure logistical operations?) to housing needs (focus on meeting demand in high-growth cities or seek to rebalance economic opportunities to encourage settlement in places with more plentiful housing stock?). Moreover, for immigration policymakers, population shifts raise questions about how to find the right rate of immigration to sustain or propel economic growth without overwhelming health, school, and other systems, and how to balance this against domestic imperatives such as helping existing residents reskill and improving productivity.

The arithmetic is unforgiving: Bringing in enough immigrants to balance out rising numbers of pensioners is not politically viable, and fewer workers for every retiree means heavier individual tax burdens. Avoiding this will depend on significant productivity (i.e., GDP per capita) gains, which will place immigration’s role in productivity under the spotlight. Governments will need to ensure that immigration fuels, rather than hampers, these productivity gains, including by focusing not on numbers alone but on the characteristics of workers admitted (in terms of their skills, capital, and the type of labor needs they fill). Finally, it will become even more essential for governments to invest in nurturing the human capital of people who arrive, alongside resident immigrants and the native born, to ensure all are able to contribute to their full potential.

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Most of the World Is Below Replacement Fertility

• About 71% of the world’s population now lives in countries with birth rates below the replacement level needed to maintain population size, which researchers say is 2.1 births per woman.
• China’s fertility rate has fallen to just 1.0 births per woman, while India has also dropped below replacement level at 1.9.
• Sub-Saharan Africa has the world’s highest fertility rates, led by Chad, Somalia, and DR Congo which have rates of more than 6 births per woman

Immigration cannot solve, but mitigate the problems of an aging population

• Global migration more than doubled since 1990, reflecting growing international mobility, while most frequent migration journeys are between neighboring countries.
• Amongst world's larger economies, Switzerland, Australia, and New Zealand have largest share of migrants with a share of around 30% of their total populations. In many European countries, migration has skyrocketed over the last three decades.
• Contrary to that, China, the world's second largest economy, has the world's lowest migrant population with a share of migrants of just 0.1%.