Immigration and the aging of native-born populations are changing the demographics and economies of advanced countries. Across countries in the Organisation for Economic Co-operation and Development (OECD), growth in the native-born population has slowed sharply due to falling birth rates and an aging populace. Yet overall population growth has not declined nearly as steeply because immigration has helped fill this gap. Much of this growth has come from immigrants arriving from developing and middle-income countries.

Despite immigration’s growing global importance, debates over its economic effects often focus narrowly on whether immigrants compete with native-born workers for jobs or affect their wages. However, immigration can influence economies in many other ways. Immigrants can bring new skills, start businesses, innovate, and encourage firms to invest. Understanding these broader effects is increasingly important, as immigration can do much more than simply offset the slower growth of these countries’ workforces.

Our research examines how immigration has affected economic growth in OECD countries. We created a dataset covering 38 OECD countries from 1990 to 2024 by combining immigration data from the OECD, United Nations, and European Union Labour Force Survey with measures of economic performance. Rather than simply counting how many immigrants entered a country, we documented net changes in the number of foreign-born residents in five-year intervals. This provides a more comprehensive picture of immigration by accounting for both arrivals and departures. We used this dataset to analyze changes in immigration and its associated long-run effects across 5- and 10-year horizons.

Our findings reveal a major change in the source of population growth in advanced economies. Growth in native-born populations has slowed substantially, while immigration has increased significantly. Much of this increase in immigration consists of migrants from non-OECD countries, including those in Africa, Asia, Eastern Europe, and Latin America.

Furthermore, our research finds that immigration has been associated with stronger economic performance. Countries receiving more immigrants, as a percent of their adult population, tended to experience stronger growth in output per worker, signifying an increase in average worker productivity. One of the clearest relationships is with investment: As immigration increased, businesses and economies invested more in capital, such as equipment, technology, and other resources that enhance workers’ output. Immigration was also associated with increases in workforce skills and broader improvements in productivity.

High-skilled immigrants, defined as those with at least a college degree, appear to have played an especially important role. These immigrants were strongly associated with greater investment and productivity growth. Lower-skilled immigration, by contrast, showed no relationship with productivity, investment, or output per worker. However, because immigrants in many OECD countries were often at least as skilled as the native-born population, immigration boosted overall economic performance.

Our findings also show an important difference between the impacts of immigration and growth in the native-born population: Both increased the size of the workforce, but only immigration was associated with greater investment and productivity growth. This suggests that immigration affects the economy through means beyond simply increasing the number of workers. The skills immigrants bring and the investments businesses make in response to immigration may also contribute to economic growth. Additionally, our research finds little evidence that these relationships diminish with higher immigration rates. Productivity gains associated with immigration did not shrink in countries that had very large immigrant inflows or already had relatively large immigrant populations.

Several limitations of our analysis are worth noting. Comparing countries’ growth after changes in immigration rates does not establish that immigration itself caused the observed relationships. For example, immigrants may be drawn to countries already experiencing rapid growth or industry-specific booms from earlier years. We addressed this challenge through several methods, including examining sudden immigration shocks, shifts in immigration policies, and differences in immigration rates across European regions rather than solely across countries. While no single approach fully solves the causality problem, employing multiple methods to identify similar patterns across several sources of immigration changes strengthens the evidence that immigration and economic performance are connected in many circumstances.

Our findings have important implications for immigration policy. Discussions of immigration often focus on its immediate effects on jobs, wages, and public services. Our research suggests that policymakers should also consider its longer-term effects on investment, workforce skills, and productivity. This is particularly important in countries where low birth rates and aging populations are slowing the growth of the native workforce.

The composition of immigration is also important. High-skilled immigrants appear to make particularly strong contributions to productivity and investment. Policies that facilitate attracting and retaining skilled workers may therefore help countries address demographic declines and support economic growth. Simultaneously, our findings do not suggest that lower-skilled immigration reduces productivity or investment.

Immigration policy involves choices that extend beyond determining how many people may enter a country. Policymakers must also consider the types of workers countries can attract, how immigrants integrate economically and use their skills, and whether businesses have incentives to invest as the workforce expands. Understanding these factors will become increasingly important as the populations of advanced economies continue to age. Our research contributes to the policy debate by demonstrating that immigration, especially high-skilled immigration, can help sustain productive workforces and support long-run economic growth.

Note
This research brief is based on Gaetano Basso et al., “Immigration and Macroeconomic Outcomes in OECD Countries,” National Bureau of Economic Research Working Paper no. 35523, July 2026. The views expressed in the brief and in the working paper are those of the authors and do not necessarily reflect those of Banca d’Italia, the Eurosystem, or the National Bureau of Economic Research.