Declining fertility rates and ageing populations pose significant economic challenges across the globe. As the relative size of the working-age population shrinks, economies face slower growth through reduced labour input. Migration is frequently proposed as a solution to offset these demographic headwinds, given that the arrival of working-age migrants can improve dependency ratios.
The economic effects of migration are typically estimated to be broadly positive, but unevenly distributed. In origin countries, emigration can foster ‘brain gain’ by raising expected returns to schooling, provide channels for knowledge transfer through diaspora networks and return migration, and yield economic benefit in the form of increased remittance inflows (Batista et al. 2025). These channels, however, may not always compensate for the loss of skilled workers; sustained emigration can reduce the domestic tax base and result in ‘brain drain’, whereby the exit of higher-skilled workers depletes human capital and negatively affects productivity (Docquier and Rapoport 2012). In destination economies, inflows of migrants can alleviate labour shortages, help to close skills gaps, and boost innovation and productivity (Hunt and Gauthier-Loiselle 2010, Peri 2012, Arkolakis et al. 2023). They often make a positive contribution to fiscal balances, as migrants tend to be of working age. At the same time, migrant arrivals can be concentrated in certain areas, putting pressure on local infrastructure, housing and the provision of public services such as education and healthcare (IMF 2025).
In the new EBRD Transition Report (EBRD 2025), we quantify the immigration flows required to prevent working-age population ratios from declining and examine constraints on migration’s capacity to fully offset the negative effects of demographic change on economic growth.
Analytical framework
We employ a neoclassical growth model with endogenous capital accumulation and demographics based on Fernández-Villaverde et al. (2025). In this framework, demographic change affects growth as an external shock through two channels. First, a declining working-age population directly reduces labour input. Second, because capital and labour are complementary inputs in production, a shrinking workforce lowers the marginal product of capital, reducing households’ incentives to save and invest and therefore slowing capital accumulation.
In this context, we calculate the migration inflows required to maintain working-age ratios constant – that is, to fully neutralise the demographic channel through which ageing affects growth. The analysis then examines whether these required flows are feasible given historical trends, labour market integration challenges, and global demographic constraints.
How much migration is needed?
To quantify the immigration flows required to offset demographic decline, we use the zero-migration scenario from the UN World Population Prospects and calculate, for every year between 2024 and 2050, the annual net immigration that would be necessary to maintain working-age population ratios at their 2023 levels. We present the results in Figure 1. In most economies, such levels are far higher than those historically observed. For many emerging European economies where net migration over the past decade has been negative, offsetting demographic decline through migration would require a complete reversal of recent trends.
We examine two different scenarios reflecting alternative assumptions about migrants’ behaviour. First, the “guest workers” scenario in assumes a steady inflow of temporary foreign workers of working-age who experience zero mortality, have no children, and leave the country before retiring. These hypothetical migrants contribute labour without adding any dependants of their own. Even under these assumptions, many economies in emerging Europe would need to maintain annual migrant inflows of between 0.5% and 0.9% of their 2023 population.
Figure 1 Offsetting population ageing through migration alone would require unprecedented migration inflows in EBRD economies
Note: This chart shows the annualised net migration rates required to maintain constant ratios of working-age population (aged 15-64) to total population at 2023 levels, expressed as a percentage of mid-year 2023 population. Historical flows represent the average annual net migration flow between 2011 and 2019 as a percentage of mid-year 2010 population.
Source: UN WPP and authors’ calculations.
The “same fertility” scenario treats migrants as permanent settlers who arrive at age 30, adopt the destination country’s fertility patterns, and are subject to local mortality rates. In this scenario, each additional migrant worker adds dependants, necessitating further immigration to offset these additional increases in the number of children as the additional gains from dependants would only materialise once these children enter the labour force. As a result, the required rates of net migration exceed 1% in almost half of all EBRD economies where the working-age ratio is projected to decline. In the case of Slovenia, for instance, the annual estimate stands at 1.7% of its population in 2023 – roughly 8.5 times the annual inflow recorded in the 2010s. In a handful of fast-ageing economies with high life expectancy such as Italy, Spain, and South Korea, the required annual migration inflows exceed 2% of the population in the baseline year.
Employment gaps
The preceding calculations assume migrants contribute to labour supply equivalently to native-born workers. In practice, the extent to which immigration can offset the adverse impact of demographics on economic growth also depends on how new arrivals are integrated into the labour market. The regression analysis that follows, based on EU LFS microdata for 31 European destinations, compares the probability of employment for immigrants with that of individuals with similar characteristics born in the host country. Results are presented in Figure 2.
Figure 2 Employment probabilities of migrants in destination countries are generally lower than those of native-born workers
Note: The chart shows employment gaps relative to individuals born in the destination countries for different regions of birth based on a linear probability model in which a dummy for whether the respondent is employed is regressed on region of birth dummies, sex and age dummies, and country-year fixed effects. The sample includes respondents aged 15-64 in 31 European economies over the 2019-23 period. Ninety-five per cent confidence intervals are based on standard errors clustered at the country level.
Source: EU LFS and authors’ calculations.
On average, foreign-born individuals are around 10 percentage points less likely to be employed than working-age adults born in the country. This gap narrows to 7.4 percentage points after taking into account differences in educational attainment. These employment differentials vary significantly by region of origin, with migrants from regions with the highest capacity for future working-age emigration (Asia, the Middle East and North Africa, and SSA) facing the largest employment gaps.
These different probabilities of being employed reflect differences in skills and their transferability (depending on the recognition of foreign credentials, for instance), language barriers and policies that govern labour market access (OECD 2024). Migration, therefore, could yield lower contributions to the effective labour supply than is assumed in the scenarios considered above.
The global constraint
In addition, the supply of potential working-age migrants is constrained by global demographic trends, as every worker drawn into one labour market is removed from another. As demographic decline becomes a global phenomenon, the pool of potential working-age emigrants shrinks.
We quantify this constraint by calculating the global deficit in working-age populations that ageing economies would experience by 2050 if they maintained constant working-age ratios at 2023 levels (or decline to two-thirds of current levels, whichever is lower) based on the guest worker scenario depicted above. This amounts to approximately 655 million working-age adults by 2050. We then estimate the potential supply from countries with growing working-age populations, assuming donor countries’ working-age shares remain constant at their current levels. Under these assumptions, the potential supply falls approximately 20% short of the global deficit.
As a result, countries in the EBRD regions that may rely on migration to mitigate the economic impact of ageing will find themselves competing for immigrant talent (as well as their domestic talent) with other ageing economies where incomes may be substantially higher. This competition disadvantages lower-income destinations, as wage differentials favour richer countries in attracting mobile labour. At the same time, countries with a growing pool of working-age adults – such as economies in sub-Saharan Africa – may face growing pressure to retain workers.
Conclusion
The findings above indicate that while migration can partly offset population ageing, the scale required to fully offset the expected demographic drags substantially exceeds historical experience and would be further limited by labour market integration challenges and global supply constraints. Policy responses to demographic decline will therefore need to incorporate other measures (such as extending working lives and boosting productivity) if they are to be effective.
References
Arkolakis, C, M Peters and S K Lee (2023), “Immigration, Innovation, and Spatial Economic Development: Theory and Evidence from the Age of Mass Migration”, mimeo.
Batista, C, D Han, J Haushofer, G Khanna, D McKenzie and A M Mobarak (2025), “Brain drain or brain gain? Effects of high-skilled international emigration on origin countries”, Science 388: 6749.
Docquier, F and H Rapoport (2012), “Globalization, Brain Drain, and Development”, Journal of Economic Literature 50(3): 681-730.
EBRD – European Bank for Reconstruction and Development (2025), “Demographic trends and the future of growth”, Chapter 1 in Transition Report 2025-26: Brave Old World.
Fernández-Villaverde, J, G Ventura and W Yao (2025), “The wealth of working nations”, European Economic Review 173, 104962.
Hunt, J and M Gauthier-Loiselle (2010), “How Much Does Immigration Boost Innovation?”, American Economic Journal: Macroeconomics 2(2): 31-56.
IMF (2025), “Journeys and Junctions: Spillovers from Migration and Refugee Policies”, Chapter 3 in World Economic Outlook, April 2025: A Critical Juncture amid Policy Shifts.
OECD (2024), International Migration Outlook 2024, OECD Publishing.
Peri, G (2012), “The Effect of Immigration on Productivity: Evidence from U.S. States”, Review of Economics and Statistics 94(1): 348-358.
