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Population Aging, Migration, and Productivity in Europe

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Population Aging, Migration, and Productivity in Europe Population aging, migration, and productivity in Europe Guillaume Maroisa,b,1, Alain Bélangerb,c, and Wolfgang Lutzb,1 aAsian Demographic Research Institute, Shanghai University, Baoshan, Shanghai 200444, China; bWittgenstein Centre for Demography and Global Human Capital (University of Vienna, IIASA, VID/ÖAW), International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria; and cCentre Urbanisation Culture Société, Institut national de la recherche scientifique, Montréal, H2X 1E3 Canada Contributed by Wolfgang Lutz, December 6, 2019 (sent for review October 31, 2019; reviewed by Roderic Beaujot and Philip Howell Rees) This paper provides a systematic, multidimensional demographic model we use 13 such characteristics (including among others analysis of the degree to which negative economic consequences of labor-force participation, duration of stay in the country, region population aging can be mitigated by changes in migration and of birth, education, and level of mother’s education). We also labor-force participation. Using a microsimulation population projec- assess demographic outcomes of the alternative scenarios in tion model accounting for 13 individual characteristics including terms of three different dependency ratios that not only cover education and immigration-related variables, we built scenarios of the changing age structure, but also changing patterns of labor- future changes in labor-force participation, migration volumes, and force participation and productivity as approximated by level their educational composition and speed of integration for the 28 of education. Based on the still widely used conventional old- European Union (EU) member states. We study the consequences in age dependency ratio––which considers everybody aged 15–64 terms of the conventional age-dependency ratio, the labor-force as equally productive and all people above age 65 as unproductive–– dependency ratio, and the productivity-weighted labor-force depen- the presumed aging burden associated with an increase in this dency ratio using education as a proxy of productivity, which ratio is widely seen as a major economic problem leading accounts for the fact that not all individuals are equality productive to higher social security costs, relatively lower economic in society. The results show that in terms of the more sophisticated growth, or even stagnation and decline. We consider such a ratios, population aging looks less daunting than when only simplistic approach based on age alone as outdated and partly considering age structure. In terms of policy options, lifting labor- misleading (2–5). force participation among the general population as in Sweden, In the following sections of the paper, we will define a set of SOCIAL SCIENCES and education-selective migration if accompanied by high in- six alternative scenarios that also reflect different possible policy tegration, could even improve economic dependency. On the directions for all 28 member states of the European Union (EU) other hand, high immigration volumes combined with both low with respect to volume of immigration, selectivity of migrants in education and integration leads to increasing economic depen- terms of education, and efforts made to integrate migrants into dency. This shows the high stakes involved with integration the labor force. These different migration-related scenarios are outcomes under high migration volumes. assessed against the background of possible future trends in population aging | immigration | projection | labor-force participation | microsimulation Significance ver since the publication of an influential 2001 study by the Migration is one of the most controversial political topics in EUnited Nations (UN) on “replacement migration” (1) this industrialized countries. One important aspect is population notion has prominently entered the public as well as the scien- aging and the prospects of a shrinking labor force in case of tific debate over migration. This terminology has evidently been low or no immigration. We address this aspect systematically inspired by the notion of replacement-level fertility, a rather through multidimensional microsimulations for all European Union (EU) member states. The outcome variables considered technical term in demography referring to the level of fertility go beyond the conventional old-age dependency ratios by also which after adjusting for child mortality would result in two studying labor-force dependency ratios and the introduced children surviving to reproductive age per woman and thus, in productivity-weighted labor-force dependency ratio. We con- the absence of migration and future changes in mortality, would sider a wide range of future migration scenarios differing by result in a stationary population size and structure in the long volume, educational selectivity of migrants, and labor market run. Replacement migration in this sense refers to the interna- integration efforts. Combined with alternative scenarios of tional migration that a country would need in order to offset labor-force participation for the EU-born population, the find- population decline and aging resulting from fertility rates that ings provide scientific insights for future migration and labor are lower than replacement level. Although the UN study itself policies in Europe. dealt with this in a purely numerical and rather neutral way, the implicit underlying assumption motivating the study was Author contributions: G.M., A.B., and W.L. designed research; G.M., A.B., and W.L. wrote that population decline and increases in the so-called age- the paper; G.M. provided data curation, formal analysis, investigation, methodology, dependency ratio (persons aged 65+/15–64) have negative con- software, validation, and visualization; A.B. provided methodology, project administra- tion, and software; and W.L. provided methodology, project administration, sequences that should be avoided. The study illustrated under and supervision. which hypothetical future migration patterns these consequences Reviewers: R.B., The University of Western Ontario; and P.H.R., University of Leeds. could be avoided. The authors declare no competing interest. The scenarios are conditional on immigration and labor-force This open access article is distributed under Creative Commons Attribution-NonCommercial- participation policies, but we stay neutral with respect to specific NoDerivatives License 4.0 (CC BY-NC-ND). policy recommendations in demonstrating the implications of 1To whom correspondence may be addressed. Email: [email protected] or lutz@iiasa. alternative migration and labor-force participation scenarios on ac.at. different dependency ratios, but we base our study on a much This article contains supporting information online at https://www.pnas.org/lookup/suppl/ richer multidimensional model. While the 2001 study only consid- doi:10.1073/pnas.1918988117/-/DCSupplemental. ered age as a relevant human characteristic, in our microsimulation www.pnas.org/cgi/doi/10.1073/pnas.1918988117 PNAS Latest Articles | 1of6 Downloaded by guest on September 25, 2021 labor-force participation of the general population by either as- as observed in Canada. It thus assumes a doubling of the suming a continuation of the recent trend or assuming that all EU immigration volume (20 million over 5 y, which corre- EU member states move toward the pattern of much higher sponds to the Canadian immigration rate in the last quarter of participation that is already observed in Sweden today. Fig. 1 a century), as well as selection for educational attain- illustrates this Swedish pattern and contrasts it against the cur- ment as currently done by Canada. It assumes, however, rent pattern in Italy where at all ages people––in particular the same integration rates into the labor market as the baseline women––participate less in the labor force. Also, in comparison scenario; the age at retirement is much higher in Sweden. 4) The Canadian/Swedish_LF scenario combines both an immi- gration system similar to Canada and efficient policies to Alternative Scenarios for Migration and Labor-Force increase labor-force participation of the population to today’s Participation Swedish level. Here we address the question of how to view aging through 5) The Canadian/Hi_Int scenario is identical to the Canadian a multidimensional demographic approach in which the scenario, with the exception of assuming a best-case scenario populations of all 28 EU member states are stratified, not only for the integration of newcomers (i.e., their country-specific by the conventional age and gender, but also by labor-force labor-force participation rates match that of the native participation, immigration status, and educational attainment born with similar characteristics by 2050). Indeed, despite which is also used as a proxy for productivity. Using a multidi- selectionofimmigrantsbasedontheirhumancapital,Can- mensional population projection model by a microsimulation ada’s immigrants still face some economic integration called CEPAM-Mic (6–9), which also considers the duration of issues; stay in the destination country and the age at immigration, we 6) The Canadian/Lo_Ed/Lo_Int scenario assumes a high vol- built different scenarios of changes in labor-force participation ume of immigration, their labor-force participation deterio- rates, the number of immigrants, their composition, and their rates and reaches in 2050 those observed in Denmark (the integration into the labor market in an effort to
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