What does an ageing Europe need from immigration?

Europe is ageing at an accelerating pace, putting pressure on future economic growth rates and government finances even as fertility rates in Europe (and most of the rest of the world) continue to decline. While subsidised childcare services and increased gender equality in the distribution of domestic labour can alleviate the trend, there is no clear policy path to returning European birth numbers towards the replacement rate for developed countries of 2.1 births per woman.  Migration into the European Union remains – as it has been since the early 1990s – the only direct way to counter many of the adverse effects of population ageing.

The design of member states’ immigration systems has multiple political and practical drivers, including economic growth, support for refugees and the freedom of citizens to live with their family. But with Europe’s potential economic growth rate forecast to slow and as pressure on public finances rises, the need for immigration to generate a net positive contribution to government balance sheets takes on additional importance.

Our paper, published 7 October, undertakes a broad review of the effects of ageing on EU member states’ pension and long-term care systems. The results of this analysis suggest that a carefully designed migration policy, which facilitates employment-based visas while restricting asylum and family-based applications, can maximise the fiscal benefits of migration for Europe. Can policymakers strike the balance needed? 

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