White or prosperous: how much migration does the ageing European Union need to maintain its standard of living in the twenty-first century?

This paper attempts to assess what migratory inflows would be required if Europeans were to maintain a certain per capita GDP growth level (i.e. a proxy for the standard of living) over the coming decades. The reasoning is that if per capita GDP levels can be maintained then the social transfer systems are most likely sustainable. The paper argues that if recent per capita growth levels are the declared target, then replacement migration would lead to a total population in Europe, without a change in labour force participation of the original population, that would simply explode.

The paper concludes that Ceteris paribus ageing leads to dropping per capita and overall growth rates and hence to an overall reduction of standards of living. Migration alone will not be able to close the “ageing gap in GDP”. Likewise, higher labour force participation of the native population will not be able to close the gap either. Most likely a combination of measures is necessary to maintain a decent standard of living in Europe. The paper argues that if Europeans want to live and not just work, they would have to:

• revise their long-term standard of living expectations (compared to those experienced in the last decade) downwards, say to an average real growth of around 1.5 to 2 per cent
• maintain a fairly high level of productivity increases of not less than 0.5%-points lower than the per capita growth rates, i.e. in the above case at least 1.5 per cent annually (that means use better technology or work more hours)
• increase labour force participation rates by at least 15 per cent (that means work more years)
• accept that they will have to share their prosperous economic union with a substantial additional immigrant population that could easily make up a quarter of the native population in 2050