Wealthy Nations Reap Economic Benefits from Immigration, Study Suggests

Wealthy nations with the highest rates of immigration over the past 35 years have reaped significant economic benefits and could still absorb more workers, new research suggests.

The study, set to be presented at a top European Central Bank conference next week, emerges amidst rising political tensions surrounding immigration, as far-right, anti-immigrant parties drive the issue to the top of political agendas and gain ground in countries including the US, Germany and Britain.

Analysing data from dozens of rich Organisation for Economic Co-operation and Development (OECD) countries, the study concluded that growth and productivity were sharply boosted by the influx of predominantly highly skilled immigrants, directly challenging political claims to the contrary.

"Receiving countries' labour productivity grew significantly during and after periods of higher immigration rates," said the paper, authored by University of California, Davis professor Giovanni Peri.

"The predictive coefficients are often significant, economically large and a significant portion of such growth in GDP per worker is realized through strong growth in investments," the paper to be presented at the ECB Forum on Central Banking in Sintra said.

PRODUCTIVITY GAINS

The total number of immigrants arriving in OECD countries from outside the bloc increased to about 100 million in 2024 from about 25 million in 1990, while native population growth turned negative in many countries.

Peri and his co-authors found that an increase of immigrants equal to 1% of a country's population is associated with an increase in growth of GDP per worker — a measure of productivity — of 1.2% within five years and 1.9% over 10 years.

The findings are especially relevant for the European Union, where the natural change of population has been negative since 2015 and the drop accelerated after the COVID-19 pandemic.

The study concluded that as much as one third of economic growth per worker in countries including Spain, Italy or Britain may have been generated by immigration between 1990 and 2024.

In Spain, the share of immigrants increased by 15 percentage points of the adult population from 1990 to 2024, a change that could result in a 28% higher growth of GDP per worker.

Actual GDP per worker grew by about 75% in this period, suggesting that up to one third of the increase could be associated with the inflow of immigrants, the paper said.

In the UK, the number of immigrants as a share of the total population rose by 10 percentage points, suggesting that immigration accounted for about 19% of GDP per person growth out of the total 60% increase, the paper said.

The benefits from immigration do not fade as inflows rise, the paper found. The experience of Canada and Australia, which have large foreign-born populations, suggests there is room to absorb more workers without sacrificing the positive response of productivity and investment, it said.