Skip to content

Immigration’s Effect on Future Workforces


Tuesday, December 4, 2018

immigration workforce
Thinkstock/alexskopje
By Subhayu Bandyopadhyay, Research Officer and Economist, and Asha Bharadwaj, Research Associate

Many Organization for Economic Cooperation and Development (OECD) nations have aging populations, with substantial fractions of their populations exceeding 55. As more of this population retires and people live longer on average, a corresponding number of younger people will have to move into the workforce to maintain a steady share of the working population for the entire nation.

This working-age population has to produce not only for themselves, but also for others, including the elderly and children. In this context, immigration can play a role, especially if the immigrants are of prime working and/or childbearing age:

  • First, the immigrants can substitute for natives who are retiring from the workforce.
  • Second, working-age immigrants are likely to have children, who can contribute to the future workforce of the nation.

Keeping these issues in mind, we examined the latest publicly available data (which were from 2013) for the proportion of foreign-born in OECD nations and the proportion of the population 55 years or older in these same nations.Data limitations required us to focus on 27 OECD nations.

aging population

We observe from the figure above that two major European economies—Germany (33.8 percent) and Italy (33.7 percent)—are at the top of the list of aging populations. However, Germany and Italy are in the bottom half of the nations in the figure below, which shows the share of foreign-born in the same countries we observed in the previous figure.

foreign born share

Such a switch in ranks between the two figures is true for most other nations in our sample as well.

Digging deeper, we found a 2015 OECD report that around 87 percent of the foreign-born in Italy in the years 2011-12 were in the prime workforce age group of 15-64 years. Indicators of Immigrant Integration 2015: Settling In, OECD Publishing, 2015. This was around 23 percentage points higher than the corresponding proportion for the Italian natives. Similarly, for Germany, the percentage of foreign-born in the 15-64 year age group was around 83 percent, which was higher than the native-born proportion by around 20 percentage points.

Seen in this light, the age profiles of the foreign-born in Italy and Germany are suggestive of future benefits from the foreign-born population. Many factors—including education, tax and transfer policies—will determine the economic future of all these nations. Immigration and demographic changes that we discussed in this post will contribute their share to that future.

Notes and References

1 Data limitations required us to focus on 27 OECD nations.

2 Indicators of Immigrant Integration 2015: Settling In, OECD Publishing, 2015.

Additional Resources

Posted In Labor  |  Tagged subhayu bandyopadhyayasha bharadwajlaborimmigrationoecdworkforce
Commenting Policy: We encourage comments and discussions on our posts, even those that disagree with conclusions, if they are done in a respectful and courteous manner. All comments posted to our blog go through a moderator, so they won't appear immediately after being submitted. We reserve the right to remove or not publish inappropriate comments. This includes, but is not limited to, comments that are:
  • Vulgar, obscene, profane or otherwise disrespectful or discourteous
  • For commercial use, including spam
  • Threatening, harassing or constituting personal attacks
  • Violating copyright or otherwise infringing on third-party rights
  • Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.
comments powered by Disqus

The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.