In most Western, industrialized nations, the population is aging. That trend is clear, evident, and longstanding. These countries also are attractive destinations for immigrants, especially those seeking to flee a violent, unstable situation in their native countries. In the current state of the European Union, these two factors are combining to create a unique situation that might be either a threat or an opportunity for the economies on that continent.

US forces transport displaced Egyptians from TunisiaVast numbers of refugees are fleeing Syria in particular, attempting to reach their European neighbors to start new lives in which the threat of war is not constant. The various European nations targeted by these immigrants have responded in various ways to the waves of new populations. Some actively discourage refugees from coming and offer little support to those who reach their borders. Others have set up extensive humanitarian aid networks and social services to help the refugees integrate into their new nations of residence.

The national-level responses reflect the vast complexity of this difficult international crisis. But at least one of the reasons cited by countries that reject the refugees is the concern that their economies will not be able to integrate and support thousands or millions of new citizens. However, a recent report by the European Commission suggests that the immigration flows actually could benefit these countries, by lowering their average population age and giving them a rush of new talent and human resources ready to fill jobs.

As a result of greater public spending to support the immigrants, the national economies reportedly should grow. In addition, the addition of younger populations might help support social systems that depend on people of working age paying taxes. Those taxes then go to ensure sufficient funding for pensions and retirement benefits for older citizens. However, some analysts suggest these benefits might be outweighed by lower wages across the board, because recent immigrants tend to be willing to accept lower wages than more established workers.

Assuming these trends and predictions are accurate, the increased spending, due to both public support and a new market of immigrants, seemingly could benefit product and service providers in European nations. For companies looking to hire more people, the effects on wages also could be positive, such that they might be able to hire more people. But European citizens remain wary that the overall effects might be detrimental.

Discussion Question:

  1. If you were to conduct an analysis of these demographic changes, what sort of information would you need to take into consideration, so that you could issue a prediction of their effects?

 Source: James Kanter, “European Union Predicts Economic Gains from Influx of Migrants,” The New York Times, November 5, 2015