Wealthy nations reap huge benefits from immigration: Study

Wealthy nations with the highest rate of immigration over the past 35 years reaped a large economic benefit and many could still absorb more workers, according to research to be presented at a top European Central Bank conference next week.

Political tensions over immigration have been on the rise in recent years as far-right, anti-immigrant parties have helped drive the issue to near the top of the political agenda while making headway in countries including the US, Germany and Britain.

The study, which looked at data in dozens of rich countries in the Organisation for Economic Co-operation and Development, said growth and productivity were both likely to have been boosted sharply by the influx of immigrants, most of whom were highly skilled, despite any 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.