What immigration means for economies as populations get older

Around the world, populations are getting older. Immigration plays a role in sustaining workforces, according to new analysis.

Projections by the Census Bureau predict that within 10 years, the number of people 65 and older in the U.S. will be larger than the number of people under 18. Populations getting older is a global trend for the long-industrialized countries — something with sweeping effects on economics, social safety nets and immigration.

Marketplace’s senior economics contributor Chris Farrell has been looking into this. He spoke with “Marketplace Morning Report” host David Brancaccio and the following is an edited transcript of their conversation.

David Brancaccio: Globally, industrialized countries on average are getting older?

Chris Farrell: Yes, if you look at the recent data from the United Nations, the global population age 65 and over has nearly doubled since the mid-1970s to 10.3% currently. And this trend toward global aging is going to continue with women having fewer children and people living longer on average.

Brancaccio: Now bring in the connection — I mentioned immigration. There is dialogue between the two, a relationship.

Farrell: That’s right, they feed off of each other. So immigration accounts for all or much population growth in many countries over the past few decades. And there’s a recent report from Pew Research Center, and it documents that in 14 countries and territories, immigration accounted for 100% of population growth from 2000 to 2020. And these places ranged from large European countries, like Germany, to smaller island nations, such as Aruba. And in another 17 countries, Pew researchers found populations did decline, but the decreases were smaller than the otherwise would have been, thanks to immigration. Among these countries: Japan.

Brancaccio: That’s a diverse set of countries that Pew looked at. What were the commonalities beyond more immigrants coming in?

Farrell: Low fertility rates and aging populations. I mean, women around the world are having fewer children. Life expectancy is also increasing. So this trend, it isn’t a short-term phenomenon. As the Economist magazine put it earlier this year, if current forecasts pan out, 2064 will be the first year in centuries when fewer babies are born than people die.

Brancaccio: Now, there are costs to immigration: strains on budget, social services. But there’s, of course, another side of the equation: The country gets more prime-age taxpayers, more consumers, more potential entrepreneurs, innovators, I guess.

Farrell: Over the next several decades, businesses and industries that cater to old populations — they’re become a much bigger part of the economy. And many of the workers filling these jobs, both skilled and unskilled, will be immigrants, said Giovanni Peri, an economist at the University of California, Davis, in a recent interview.

Brancaccio: Which would would bring us to overhaul of immigration policy in the U.S. But it’s not just the U.S. — immigration policy is challenging in Europe.

Farrell: That’s right. So Perry argues, look, the economics are so compelling, that eventually we’ll land on practical political solutions that enjoy broad support.