As advanced economies face shrinking native populations and demographic aging, foreign-born workers are increasingly powering economic growth, spurring investment, and lifting labor productivity, according to a study published by the National Bureau of Economic Research (NBER).
A powerful driver of productivity and investment
Analyzing net immigration across 38 OECD nations from 1990 to 2024, researchers found that migrant inflows from non-OECD countries significantly increased gross domestic product per worker over five- and 10-year horizons. While native population growth slowed sharply and turned negative in the 2020s without generating positive productivity effects, immigration supplied vital labor and stimulated substantial business investment. Rather than reducing capital per worker, migrant arrivals encouraged firm creation and long-term capital deepening.
Read also: China’s ‘brain gain’: Top tech talent abandons the American dream.
The high-skilled advantage
The economic gains were overwhelmingly driven by high-skilled workers holding tertiary education degrees. In more than 81 percent of observed cases, incoming migrants were more educated than the host country’s resident population. Over a decade-long horizon, college-educated immigrants significantly raised human capital intensity, accelerated total factor productivity growth, and boosted capital accumulation. In contrast, low-skilled immigration had a neutral long-term impact on productivity and capital per worker, showing no depressing effect on overall economic performance.
No signs of economic saturation
Contrary to claims that high immigration volumes strain local absorption capacity, the study uncovered no evidence of a «saturation» threshold. Countries with foreign-born population shares exceeding 10 percent continued to absorb new arrivals effectively while maintaining strong productivity and investment growth. Additionally, the researchers noted that native population declines were not automatically offset by immigration policies, as cross-country migrant flows were largely driven by unexpected global shocks rather than coordinated government policy. Ultimately, the study highlights that high-skilled immigration expands the aggregate economic pie for developed nations.
