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

Executive Summary

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. Most countries lack the social license for immigration at this scale—to say nothing of the pressure such an increase would put on housing systems and public infrastructure already under strain. The last several years have seen a rising backlash to immigration in many high-income countries that is partly (although not wholly) explained by pressures on housing and public services that stem from this type of population growth. For instance, Canada bringing in more than 1 million people in 2023 to compensate for low population growth during the COVID-19 pandemic was swiftly met by public backlash.

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.

"While immigration cannot solve population aging, it can be a useful demographic and economic lever—if it is employed more effectively."

Immigration policy and demographic strategy need to be brought further in line with each other. Five principles could guide that relationship:

1. Human capital matters more than a headcount. Each worker shoulders a higher fiscal burden in an aging society with a small workforce. As a result, the composition of arriving migrants—skills, earning potential, sector alignment, career stage—will increase in importance. This means prioritizing the admission of high earners or younger workers with longer careers ahead of them, and investing in credential recognition so that immigrants can work at their skill level. AI should also factor into this calculus: The skills worth importing today may not be the ones that matter in a decade, and thus selection systems should value adaptability to changing labor market conditions.
2. Integration is a productivity multiplier. The role of integration, rather than immigration, policies in meeting labor shortages is often overlooked. In the Netherlands, three-quarters of current vacancies could be filled if migrants participated in the labor market at the same rate as the native born. Language training, job counselling, subsidized work experience, and bridging programs can all allow newcomers early access to work while also enabling subsequent upskilling. As such, some countries’ decisions to cut integration budgets at precisely the moment labor shortages are biting is a false economy. Governments should treat integration programming as a productivity investment, not a welfare cost.
3. Population planning is economic planning. Immigration is often siloed off from housing, infrastructure, and pension policy, and rarely is part of long-term planning. For instance, Spain’s recent demographic recovery plan lists 130 measures to address aging and regional decline without a single reference to migrants or integration, even as the government is expanding migration for demographic reasons. But other countries, such as Korea, are starting to build immigration into population plans, alongside pro-natalist policies. More governments could learn from the migration levels planning processes that Australia and Canada have developed, however imperfectly, both to better integrate immigration with fiscal sustainability and pension projections and to properly resource housing and infrastructure expansions associated with population growth.
4. Immigrants age too. Destination countries are now grappling with a rising population of immigrant retirees, including some lacking legal status in the country, and many are reaching retirement age without a pension or health care. Among migrants who do return to their country of origin after working abroad, many lose access to pension entitlements due to fragmented contributions or lack of portable benefits. Temporary migration programs may appear to solve the problem for destination countries, but they effectively offshore the costs of aging onto lower-income origin countries. Instead, countries should explore ways to share the burden for retirement more equitably, including by giving migrants autonomy over their own retirement funds.
5. Immigration policy should reduce rather than entrench global inequality. Many low- and middle-income countries that send significant numbers of workers to high-income countries are rapidly aging too, which will intensify concerns about brain drain. This also points to a growing need for origin countries to capitalize on diaspora engagement and prioritize worker retention in sectors such as health care. Meanwhile, sub-Saharan Africa will generate the majority of global population growth in coming decades, but capturing that demographic advantage requires connecting development investment to mobility pathways—not through one-off pilots but sustained skills partnerships that link up training, mobility, and local economic development.

Immigration can offer half an answer to population aging, alongside other levers such as retirement age extensions, productivity investments, family-friendly policies, and social security reforms. But for this to work, immigration must be embedded in a broader demographic strategy rather than treated as a substitute for one.

1. Introduction

Immigration is often seen as a silver bullet to counteract population aging. The logic is simple: For aging countries, immigration can help meet labor shortages, inject a youthful cohort of taxpayers to offset growing retiree numbers, and grow the population—and thus bring an instant boost to gross domestic product (GDP). Meanwhile, for youthful countries with more working-age people than available jobs, workers can become a top export industry. Countries such as Mexico and the Philippines have historically exported large populations of young workers with limited local opportunities, which has both quelled discontent and fueled economic development via remittances.

But immigration’s role in responding to population aging is not that simple, as admitting enough people to fully counterbalance demographic change would lead to year-on-year expansions in population growth that destination countries have been unwilling to countenance. Moreover, almost every country is aging, barring those in sub-Saharan Africa, including emerging economies and traditional immigrant-sending countries. Some of the collapse in fertility has been well-publicized and staggering: China’s birth numbers are now down to levels not seen since 1949.1 But several countries in Latin America, the Middle East, and northern Africa also now have ultra-low fertility rates, meaning they are getting old before they get rich.

At the same time, many traditional destinations for immigrants, including the United Kingdom and Canada, are scaling back labor migration pathways in response to a perception that employers have been overly reliant on immigration to the detriment of the local workforce. Others, most notably the United States but also Sweden and Germany, are curbing benefits, ramping up immigration enforcement, and carrying out returns to the degree that even integrated, legal residents are considering going elsewhere. Such policies reflect heightened public skepticism toward immigration that may trump economic and demographic imperatives.

It is by no means clear that this resistance will hold, especially as labor shortages begin to bite and people see the fallout—houses not being built and nurseries lacking staff, for example. In East Asia, the region with the earliest and sharpest demographic cliffs, some governments are expanding (mostly temporary) immigration pathways, despite these ethnically homogenous societies offering fertile ground for anti-immigration sentiment. At the same time, a fundamental transformation in the labor force is beginning to unfold with the advent of generative AI, which could mean both huge financial gains and fewer workforce needs in some shortage sectors—though whether it will ultimately create or destroy jobs remains deeply uncertain.

The next few years will provide a real-time experiment in the success of policies that prioritize immigration versus other economic levers to help countries navigate population aging, including extending retirement age, investing in productivity advances, and reforming social security systems. Different models are already taking shape. China’s “high-quality population” strategy is betting on AI and technology to protect GDP with a smaller labor force. At the other end of the spectrum, Spain is explicitly focused on quantity, using regularization as a tool to boost its working population and GDP while offering security for residents with protection needs such as Venezuelans. Stretched across the middle of this spectrum are countries such as Australia, Canada, and the United Kingdom that are trying to reduce overall admissions numbers and focus more on newcomers’ skills and earning potential, conscious that a shrinking workforce means every new addition must pull their weight—or more.

"The next few years will provide a real-time experiment in the success of policies that prioritize immigration versus other economic levers to help countries navigate population aging."

This policy brief examines whether and under what circumstances immigration can mitigate demographic decline, including a look at whether generative AI may lessen some of the pressures caused by population aging. It identifies five guiding principles for thinking about the relationship between population aging and immigration.

2. Can Immigration Counteract Population Decline?

There is a widely overlooked truism in demographics: If the policy objective is to hold the ratio of retirees to workers (the old-age dependency ratio) steady, the number of immigrants needed rises every year—and rapidly becomes politically unrealistic and physically unmanageable.2 According to a simulation by the Organization for Economic Cooperation and Development (OECD), the migration numbers needed to offset increases in the old-age dependency ratio would imply a 75-percent increase in total population across OECD countries by the year 2050.3

While theoretical, this axiom is already playing out in practice. By admitting around 1.28 million newcomers in 2023, Canada sought to counteract the challenges of population aging and labor shortages that were especially pronounced after the COVID-19 pandemic.4 But housing and infrastructure could not keep pace. Cities such as Toronto and Vancouver saw housing prices soar due to increased demand, and public frustration grew. The proportion of people who said there was too much immigration in Canada shot up from 27 percent to 58 percent over two years, with housing the main reason cited.5 Similar stories have played out in Australia and the United Kingdom, where net immigration and its associated pressures on housing and services compete in polling with more traditionally contentious issues, such as small boat arrivals, as top immigration concerns. Moreover, the demographic story in many countries is two-speed, with robust population growth in cities (despite lower fertility rates) and population shrinkage and aging in rural areas and smaller cities.6

These examples should offer a modest note of caution for Spain, which is seeking to boost nominal GDP through an expansion in labor mobility and regularization programs. This includes the country’s arraigo program (which offers regularization to anyone who has been in the country for two years and has a job) and the one-off regularization of irregular immigrants who have been resident for five months or more, announced in January 2026.7 Immigration thus sits at the absolute heart of Spain’s economic growth strategy, with the economy growing 2.9 percent in 2025.8 The tradeoff is that Spain has been “quantity rather than quality driven,” as one investment report put it, with its impressive GDP growth far outpacing GDP per capita growth.9

But just because immigration cannot solve demographic issues alone does not mean it should be excluded from the response. One thing that policymakers often overlook is that immigrants are part of families, not just individuals. In the United States, all growth in the child population between 2000 and 2023 came from U.S.-born children with at least one immigrant parent.10 And without the immigrant-origin population (that is, immigrants and U.S.-born people with immigrant parents), the prime working-age population would have shrunk by more than 8 million in that period. This has implications for both immigration and integration policies, discussed in Section 4.

"Right now, fast-aging countries including those in East Asia are coming up against the limits of pro-natalist policies and technological investments."

Immigration can also be a stopgap. Right now, fast-aging countries including those in East Asia are coming up against the limits of pro-natalist policies and technological investments, since reversing fertility rate declines and alleviating labor shortages through AI and automation are not strategies that materialize overnight.11 While not calling themselves countries of immigration, Japan and Korea have responded to their demographic cliffs by quietly expanding immigration. In Europe, Hungary has also been quietly expanding immigration pathways. Studies of pro-natalist policies suggest that child-care subsidies, generous paid leave, and sustained cash transfers can slightly increase birth rates, but many of the effects are due to parents accelerating their existing plans to have children rather than having more children in the long run.12 Moreover, there may be a tradeoff between increasing fertility rates and tapping into underused forms of labor, including women and newly retired people, since parents and grandparents who care for children are less likely to work full time.13 Immigration, on the other hand, is compatible with expanding labor force participation—and in fact may even increase the supply of high-skilled women in the workforce.14

Finally, demographers, economists, and pension experts scoping fiscal futures often overlook the fact that many of their preferred strategies—including pursuing productivity gains and raising the retirement age—are deeply intertwined with immigration policy decisions. Restrictive immigration policies that make it harder for immigrant workers to naturalize or bring their families with them can dissuade high taxpayers such as entrepreneurs or bankers from choosing (or staying) in a particular country, and steep fees to sponsor skilled workers can push companies to move jobs overseas, especially in inherently mobile sectors such as technology. By contrast, a large supply of low-cost migrant labor can blunt incentives for employers to improve wages for workers overall, invest in technology, or redesign jobs.15

To cordon off immigration questions from broader demographic and pensions planning, just because immigration is not a silver bullet, is thus to throw the baby out with the bathwater. Instead, more strategic planning is needed to effectively manage how immigration and population change interact.

3. Could Artificial Intelligence Mitigate the Need for Immigration?

The backlash against immigration being seen across many high-income countries, and the associated introduction of restrictive policies is happening at a time when employers are weighing how to restructure their workforces to leverage AI.16 This shift begs the question: If AI reduces labor shortages over the next decade, does the entire case for immigration-as-a-demographic-fix collapse?

There are a number of ways that technology can mitigate population aging. First, through a new industrial revolution and transformation in productivity. The underlying logic is that if AI delivers productivity gains large enough to outpace workforce decline, the fiscal arithmetic of aging changes—fewer workers can sustain more retirees, provided the gains are captured through taxation and channeled into pensions and care. But this hinges on both a technological bet paying off and social policies distributing the proceeds accordingly. Many estimates conclude that productivity gains are likely to be modest in the short term, though some scenarios envisage much larger gains if adoption is rapid.17

Second, technology can help alleviate pressures in sectors facing the most acute labor shortages. AI systems are transforming sectors such as agriculture, where precision weed control,18 predictive weather analytics, and berry-picking robots19 have broken through barriers thought to make agriculture less susceptible to automation. And even in elder care—where it has long been assumed that there are limits to what can be automated—AI monitoring systems and humanoid robots are being developed that aim to help elderly people stay in their own homes.20 But progress in many of these areas has been slower than predicted, economists’ track record of predicting automation of many immigrant-heavy sectors has been poor, and there is likely to be a ceiling on what can be automated. For instance, despite investing more than $300 million into research and development of care robots since the 2010s,21 Japan faces an anticipated shortfall of nearly 1 million health and care workers by 2040.22

The most visible impacts of generative AI so far have been on white-collar workers, particularly through the winnowing of entry-level jobs. A recent Stanford Digital Economy Lab study found that early career workers in the most AI-exposed occupations have experienced a 16-percent decline in employment.23 Anthropic’s labor market analyses have found similar results, although they note that most exposed occupations are not yet employing the full capabilities of AI—especially in office, administrative, legal, and similar roles.24 At the same time, AI could bring forward new occupations and generate new categories of work, as technological advances throughout history have tended to reconfigure rather than eliminate jobs outright.

While the overall impact is uncertain, all of this has important implications for immigration policymakers. Governments should seek to design immigration policies resilient to different population and technology scenarios, invest in integration supports that anticipate more labor market churn, guard against employer-driven admissions systems undervaluing younger workers, and place greater emphasis on adaptability and soft skills alongside traditional qualifications. In short, the case for immigration remains, but the terms on which it delivers value are changing. But both technological and demographic change point to a similar set of priorities: productivity, integration, upskilling, flexibility, and global equity.

4. Immigration Policy Principles for an Aging World

Immigration has become the go-to solution for demographic decline in wealthy countries—but it is at best a half-answer, alongside investments in productivity, extensions to the retirement age, and family-friendly policies. While immigration can help alleviate labor shortages and shore up tax bases, unless carefully managed it can create new pressures—housing shortages, strained public services, downward wage pressure in certain sectors—that threaten the fragile consensus making immigration politically possible in the first place. A few principles could hold policymakers in good stead:

A. Human Capital Matters More Than Headcount

The OECD projects that by 2060, the old-age dependency ratio will reach 50 percent in OECD countries—meaning for every two workers, there will be roughly one retiree—compared to 35 percent in 2026.25 This should fundamentally shift the immigration calculus from a focus on headcount to productivity. Because countries cannot continue to import enough people to maintain existing worker/non-worker ratios, they need workers to be more productive.

Adjusting to this reality will mean a mix of mobilizing older workers in good health, closing the gender gap, activating working-age people not in the labor force (including some existing immigrant residents), and bringing in new immigrants. But since each worker will be bearing a higher tax burden, governments will need to focus on high-productivity arrivals: targeting migrants with skills aligned to high-growth sectors (technology, health care, construction), focusing on those with high earning potential (including by prioritizing younger workers with a longer career ahead of them), and committing to integration services, including credential recognition, that allow newcomers to work at their skill level. Composition matters more in an aging population because high earners and those who increase human capital raise GDP per capita, while low-skilled migrants and those unable to use their skills reduce GDP per capita.26

Defining and measuring “high productivity” becomes more complex in an AI-driven economy. Immigration policymakers will need to balance current job prospects and earning potential with longer-term resilience to automation. On-paper characteristics to measure human capital, such as degrees, do not always translate into robust long-term integration outcomes, especially as employers increasingly value proxies for productivity other than qualifications. One priority area for admissions policymaking is improving methods for measuring soft skills, which could draw on practices from the private sector, including skills assessments and simulations. Moreover, as more people find themselves in nontraditional working arrangements such as self-employment, freelance work, working for multiple employers, or working remotely for an employer in another jurisdiction, employer sponsorship will come up against limitations for particular sectors such as technology. It also risks overlooking other high-net-worth individuals with potentially greater economic and fiscal contributions.

Of course, not all immigrants are selected for admission through carefully designed labor migration policies. One of the significant determinants of overall fiscal contribution is visa category. For instance, an Australian study reports an estimated positive lifetime fiscal impact of AUD 198,000 for people admitted as skilled migrants, a negative fiscal impact of AUD 126,000 for family migrants, and a negative fiscal impact of AUD 400,000 for humanitarian arrivals (compared to negative AUD 85,000 for native Australians).27 Countries rightly accept refugees and family members of residents as new members for reasons other than their economic potential, but these commitments make it even more critical to maximize the productivity contribution of the discretionary labor migration stream—and to invest in all immigrants’ integration, as will be discussed in Section 4.B.

Moreover, prioritizing high earners may be difficult amid rising low-skilled labor shortages in elder care, agriculture, hospitality, and construction—sectors largely resistant to near-term automation. And while shifting immigration systems to focus selectively on high-skilled workers might make sense on paper, in practice governments must balance selectivity with the reality that there is a disconnect between where the workforce of tomorrow is located and where economic opportunities can be found—a mismatch that may drive irregular migration if legal pathways do not reflect labor supply and demand dynamics.

"Prioritizing high earners may be difficult amid rising low-skilled labor shortages in elder care, agriculture, hospitality, and construction—sectors largely resistant to near-term automation."

Finally, aging economies may face intensifying competition for global talent—not just workers, but capital—as the contribution of labor to taxes falls.28 This may mean governments step up efforts to attract tech founders and AI firms, as the United Kingdom is doing with its new Global Talent Taskforce.29 But it is important to think beyond immigration pathways alone and to consider the broader environment for business—including access to finance, travel infrastructure, and low-cost energy as well as reducing the costs of compliance with data protection and reporting requirements—to make it attractive for high-value firms to locate in these countries. This is likely to be a better strategy than the once-popular investor visas, which tended to be a tool for high-net-worth individuals to purchase a residence in a country while continuing to evade or pay tax elsewhere.

In sum, while ideally governments should prioritize migrants whose skills align with high‑growth sectors (technology, health care, construction) and with roles more difficult to automate, they will also need to recognize that many migrants arrive through family and humanitarian channels—and that this increases the importance of maximizing the productivity of labor migration streams, while investing in the labor market integration of all immigrants, including those admitted for reasons other than work.

B. Integration Is a Productivity Booster

Skills shortages are likely to intensify in coming years, but a rise in workforce participation could offset this. This will have to include older workers (ages 65–74) and women, but also immigrants—both new arrivals and longer residents. As such, integration policy is an underused tool both for bringing marginalized groups into the workforce and for meeting particular skills shortages.

Even if governments scale down labor migration, they will continue to receive asylum seekers, refugees, and family dependents. It therefore makes sense to ensure that all who come are able to fit into the local labor market—and moreover, that their potential is not wasted, so that immigration can be a force multiplier for productivity gains and the growth of decent jobs. The effects of immigration also extend beyond the main applicant. A software engineer who comes to the United States on an H-1B visa and brings a spouse and two children adds to the U.S. population one worker and three dependents; if that spouse cannot legally work—as is currently the case for many in this situation (as H-4 visa holders)—the household’s fiscal contribution is halved while its demands on schools and services remain. Countries that treat family migration as a reluctant concession rather than a policy lever thus leave economic potential on the table.

"Countries that treat family migration as a reluctant concession rather than a policy lever thus leave economic potential on the table."

In many countries, skills shortages coexist with high unemployment and underemployment rates for migrants, although this varies by migrants’ country of origin, entry route, and gender. In the Netherlands, for example, three-quarters of vacancies could be filled if migrants ages 25–65 participated in the labor market at the same rate as the native-born population.30 The European Commission’s Joint Research Centre modelled various migration scenarios and found that integration has a larger impact on the dependency ratio than the actual number of migrants.31 It should be noted that this employment gap is not present everywhere: In the United States, immigrants are employed at higher levels than the U.S.-born population. But even there, as in many high-income countries, there is still potential to better leverage the skills of certain immigrants as an alternative to importing more workers from abroad.

Fixing these gaps and supporting fuller labor market integration can be costly, but the rewards can be significant. For instance, a Danish study found that additional language training significantly increased earnings, employment, and onward schooling,32 and a French study found that language training increased labor force participation.33 But fights over the rising costs of integration programming amid a broader backlash to immigration have led some governments to cut, not expand, integration courses. The German government, for instance, has restricted access to integration programs for asylum seekers and people with tolerated status (initially it had proposed also making Ukrainians ineligible, but later backtracked).34 And in Canada, the Comprehensive Expenditure Review is likely to slash $686 million from the country’s Settlement Program, which includes credential recognition services, language courses, and other integration supports.35

But amid concerns about these costs, there are also opportunities—for instance, to think about ways to adapt mainstream workforce development mechanisms, such as job centers, to make tried-and-tested programs designed for immigrants available to a wider population.36 And thus far, no government has thought seriously about ways to incentivize voluntary work for people unable to find formal work; a migrant woman who has considerable caring experience but struggles to pass formal exams in a foreign language might nonetheless play a critical role in keeping her elderly neighbors out of expensive residential care. While such an approach has the whiff of “workfare” policies, which have been largely punitive in the Netherlands and United States where they have been tried, there is an opportunity to consider what a more human, economically sound version could entail and how to design the right policy levers to make volunteering easy and financially viable for volunteers.37

The other issue that countries may have to grapple with is regularization. Many migrants in irregular status do not contribute taxes (though some do38), and they can become vulnerable to exploitation. Regularization policies can bring workers into formal systems, increase tax revenue, and allow for skills upgrading. There are tradeoffs here: One-off regularizations are unlikely to create a pull effect, but if they become systematized, they can encourage people to arrive through irregular channels. As such, the Spanish arraigo policy, which allows people who have entered the country illicitly or overstayed a visa to work under the radar and then apply for regularization based on documented work or training, has been criticized for incentivizing irregular migration at the expense of opening legal channels.

With population aging comes a responsibility to ensure that all workers—native and foreign born alike—can meaningfully contribute. A commitment to immigrant integration thus becomes even more important as societies age, and cuts to integration budgets should be considered carefully given their potential medium-term fiscal costs.

C. Population Planning Is Economic Planning—and Immigration Must Be Central

Population changes, including growth, decline, urbanization, and growing regional disparities, all have implications for public service planning. While the far right has scapegoated immigration for a host of ills—spiraling rents, wage stagnation, overcrowded schools—there is a kernel of truth in these charges. Specifically, governments were ill-prepared for the population growth that stems from using immigration to offset aging, and for the ways these effects are concentrated asymmetrically in particular cities. This was the story in Canada, for instance, when the post-COVID-19 immigration surge wreaked havoc on rental prices and the government lost public support.

Right now, however, most population planning does not take migration issues into consideration. In many countries, immigration is missing from demographic strategy or mentioned only in passing, as in Spain’s 2021 demographic recovery plan that lists 130 measures to address aging and regional decline—including labor market reforms for women and youth—but contains no reference to migrants, migration, or integration.39 By contrast, China has made population planning part of its economic strategy, integrating demographic targets with industrial modernization and fiscal policy. And after numerous population plans that do not include immigration, Korea is now including immigration and demographic planning together for the first time.40

Migration levels planning can also be a useful governance tool and mechanism for public accountability. Australia sets an annual target for different admissions streams,41 and has committed to turning this into a multiyear process that also reflects the interests of regions experiencing asymmetrical immigration impacts and demographic challenges (some facing depopulation, others congestion). Canada introduced a levels plan extending three years ahead, with the 2025–27 plan including for the first time targets for temporary residents (in addition to permanent residents) to account for the full scope of newcomers.42 Both countries acknowledge the need to adjust housing, health care, and infrastructure capacity based on admissions, to avoid concerns about a “population trap” (where growth outpaces infrastructure) or exceeding absorption capacity.43

Still, immigration policy remains painfully short-termist in most countries, driven by immediate labor shortages rather than long-term workforce building. Policymakers rarely connect immigration decisions to broader tax, pension, and social safety net planning—treating it as a labor market lever rather than a tool for demographic stability. This fragmentation is a petri dish for backlash: Population growth without planning creates visible pressures—housing shortages, school overcrowding, health-care strain—that can fuel political opposition to immigration itself.

"Immigration policy remains painfully short-termist in most countries, driven by immediate labor shortages rather than long-term workforce building."

Instead, population planning needs to become better at forecasting possible scenarios and helping governments work across portfolios to decide how to balance immigration and workforce development approaches in order to meet rising labor needs. It should also inform resource allocation and planning to mitigate population pressures felt at the local level. Finally, population planning should take into account the potential fiscal costs and benefits offered by immigrants, and how to best maximize the benefits—including with transparent calculations of the potential returns on investment of workforce development and integration programming, and by properly factoring in health and pensions costs as immigrants themselves age (see the next subsection).

D. Immigrants Age Too

The demographic dividend that immigration offers is time-limited. Advocates for the demographic benefits of immigration assume that migrants remain in the workforce indefinitely—or that they depart before old age. In reality, as immigrant populations mature alongside other members of a society, destination-country governments are beginning to confront a new challenge: An aging immigrant population may fall through the cracks of pension and welfare systems designed around different contribution patterns.

This impact is already being felt in some cities experiencing the graying of their immigrant populations. This includes some older immigrants who lack adequate savings and are pushed to keep working, struggling with financial hardship and social isolation, or who lose access to benefits and health care. For instance, in New York City, elderly immigrants are 50 percent more likely to be living in poverty than native-born individuals of a similar age,44 and they are likely numerous among the one-third of all immigrants who needed health care in the past year but could not access it.45 The issue is particularly stark in the United States, where what are often small earning gaps between immigrants and the native born widen considerably for older people, according to a U.S. study published in 2024.46 Some countries such as Canada have aging-specific settlement and integration programs that offer guidance on services and personalized navigation support.47 But even with more robust social safety nets in Europe and Canada, immigrants are still likely to benefit less than native-born peers from contributory pension systems since many have shorter working lives in the country.48

Migrants who return to their origin country may also face challenges, especially if countries lack bilateral or regional agreements around social security coordination. One way to mitigate this is through a portable retirement fund, such as Australia’s superannuation fund, an account that accumulates for migrant and native-born workers alike throughout their working lives and can be converted if people leave the country.49 Origin countries can also take steps to help migrants secure their financial futures. For example, the Philippines’ Overseas Workers Welfare Administration has a mandatory membership contribution every two years and provides a reintegration program with grants and low-interest loans (in lieu of a traditional pension).50 A more ambitious solution would be wider portability of pensions and social security. According to a 2018 estimate, only 23 percent of migrants worldwide are covered by bilateral social security agreements that guarantee the totalization of contribution periods and extraterritorial payment of benefits,51 and nearly four in five globally are without any social protection at all.

Currently, incentives are limited for governments to pursue social security reforms if they expect the costs of immigrant aging to fall on other countries. Destination countries may begin to address the growing costs of aging immigrant populations by relying more systematically on temporary and circular migration pathways. This would create more demographic benefits for destination countries (hosting migrants only while they are of working age), while offshoring the challenges of supporting them in their older age to origin countries. Such an approach raises concerns about brain drain and global inequalities (discussed in the next subsection). However, given political and economic trends in many destination countries, this is likely to be the direction of travel.

E. Immigration Should Reduce, Not Exacerbate, Global and Regional Inequalities

As competition for talent intensifies, wealthy aging countries may exacerbate inequality by poaching skilled workers from countries that can least afford to lose them. While concerns about brain drain are nothing new, the challenge is compounded by the fact that many traditional sending countries are also aging rapidly, creating difficulty in meeting care needs and sustaining elderly populations without the social safety net or financial cushion of higher-income countries. Evidence indicates that, on balance, migration expands human capital supply in countries of origin—even among those who do not migrate—but many of the assumptions underlying this research have not been tested in aging origin countries where the pressures may be greater.52 Moreover, demand for health-care workers is surging, and current efforts to prevent brain drain have been shown to be ineffectual (such as “red lists” of countries with critical health-care worker shortages, from which international recruitment is discouraged). The international community will need to step up efforts to support knowledge transfers and brain circulation, while potentially exploring innovative ways to mature nascent social protection systems.

Meanwhile, sub-Saharan Africa will account for the majority of global population growth in the coming decades, positioning the region to supply a significant share of the global workforce. By 2100, Africa will be home to 40 percent of the world’s working-age population.53 But capturing the advantages of this growing demographic asymmetry is not straightforward. Many would-be migrants lack skills that are in demand in higher-income countries. Donor countries prioritizing international aid investments should attend more to the supply of labor, supporting countries of origin and transit as they build up their education and training systems. To that end, good practices include developing skills partnerships that link training in origin countries to predictable mobility opportunities and investments in local systems.54 Such efforts have been tested in various contexts but need to move beyond the pilot stage. AI and other technologies can facilitate greater access to language training, making it much easier for workers of one linguistic background—for example, French- or Arabic-speaking Africans—to move to and fill labor shortages in destinations where English, German, Japanese, or other languages are spoken.

"By 2100, Africa will be home to 40 percent of the world’s working-age population."

Another option is to harness the opportunities presented by remote work. Remote and hybrid work, cross‑border digital employment, and platform‑mediated work open new ways to address demographic and labor market imbalances. Destination countries can tap foreign labor without permanent settlement, or redirect some migration away from congested metropolises and toward smaller cities and regions in need of revitalization. But to reap the more sizable benefits, including for local economic development, countries will need to take a whole-of-government approach that coordinates across portfolios to develop a remote-work strategy integrating immigration priorities with economic development and inclusive growth objectives.

Meanwhile, origin countries can benefit when workers earn a living in higher‑wage markets while remaining in place, provided taxation rules, social security systems, and financial infrastructure keep pace. This similarly requires aligning immigration policies with economic development, and clearer frameworks on taxation and social security for remote and cross‑border workers to avoid double taxation and make it easier to play by the rules.

All told, the demographic shifts of the next decades will make it more vital to unlock the potential in youth populations in ways that support both mobility and local workforce development.

5. Conclusion

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.

"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."