Demographic and labor force impacts of future immigration flows into Europe: does an immigrant's region of origin matter?

Europe has experienced a significant increase in immigration in the 21st century, becoming a key demographic component in developed European nations with low fertility. Previous studies have modeled the demographic impact of immigration, often using "what if" scenarios to project population size, working-age population, and age dependency ratios under varying immigration levels. These studies have shown that higher immigration levels can significantly impact population size and prevent population decline, but sustainably modifying age structure requires unrealistic immigration levels. A common limitation is the treatment of immigrants as a homogenous group, ignoring the diverse origins and associated socioeconomic behaviors. This study addresses this limitation by incorporating the region of origin as a source of heterogeneity in a microsimulation model to assess the impact of major changes in immigrants' regions of origin on future demographic trends and dependency ratios in European countries up to 2060. The high uncertainty surrounding future migration, coupled with potential future events (e.g., climate change, anthropogenic disasters), necessitates such simulations to explore the long-term impacts of changing immigration composition.

Existing literature demonstrates the significant impact of international migration on low-fertility countries. Studies employing population projection models have explored the effects of various immigration levels on population size, working-age population, and age dependency ratios. While higher immigration levels can positively influence population size and potentially mitigate population decline, significantly altering age structure requires unrealistic immigration scales. The limitations of past research lie in the homogenous treatment of immigrants, neglecting the diversity in their origins and associated socioeconomic behaviors. Existing models often categorize immigrants broadly, overlooking the correlation between place of birth and socioeconomic factors like labor outcomes, education, and fertility. This study aims to bridge this gap by explicitly considering the regional diversity of immigrant populations in population projections.

This study utilizes the QuantMig-Mic microsimulation model, built upon the CEPAM-Mic framework. QuantMig-Mic projects the population of 31 European countries, incorporating place of birth as a key source of heterogeneity across multiple dimensions, including educational attainment, labor force participation, duration of stay, and age of arrival. The model uses a base population estimated from the 2011 census and pre-simulations replicating demographic dynamics from 2011-2020, incorporating data from various sources including vital statistics, EU-LFS surveys, and Eurostat estimates. The model incorporates place of birth into several modules: migration destination (acknowledging the correlation between origin and destination), fertility (considering differentials by maternal place of birth, duration of stay, and age at arrival), education (including parents' place of birth as a predictor of children's educational attainment), labor force participation (accounting for integration dynamics specific to region of birth), and emigration (considering differentials by place of birth). The study employs five scenarios: a reference scenario (representing current trends) and four alternative scenarios where 50% of immigrants from a specific region (Asia, Europe, MENA, Sub-Saharan Africa) are assumed to arrive in each projected period from 2025 onwards, while maintaining the total number of immigrants as in the reference scenario. The model analyzes projected population size, age dependency ratio (ADR), labor force dependency ratio (LFDR), and productivity-weighted labor force dependency ratio (PWLFDR).

The study's simulations reveal that while major shifts in the origin of immigration flows significantly impact the spatial distribution of the population across Europe, affecting the population size of some countries, the overall demographic and labor force trends are only marginally affected. Although the SSA+ and MENA+ scenarios yielded slightly higher population sizes (+3M) by 2060, this was not reflected in improved dependency ratios. The increasing trends in ADR, LFDR, and PWLFDR were similar across scenarios. Specifically: * **Population Size:** While some scenarios showed small variations in population size at the European level, the differences were minor (less than 0.7%). The largest impacts were observed at the country level, with different regions of origin resulting in different levels of net population changes in specific countries. * **Dependency Ratios:** The increase in all three dependency ratios (ADR, LFDR, and PWLFDR) was evident across all scenarios, but the increase was considerably less for the LFDR (+20%) and PWLFDR (+5%) than for the ADR (+50%). This discrepancy stems from the ADR's reliance on a simplistic view of dependency, while LFDR and PWLFDR account for labor force participation and worker productivity, respectively. Importantly, changes in the origin of immigrants produced similar dependency ratios across all scenarios, highlighting the limited impact of origin on these key indicators. * **Country-Level Impacts:** While the European-level impact of changing immigration origins was limited, the analysis revealed a notable country-level effect. The Europe+ scenario significantly increased Germany's projected population, while the SSA+ scenario led to a narrower gap in population size between Germany, the UK, and France. This underscores that the impact of changing immigration composition manifests most strongly in the spatial distribution of the population across countries. * **Low-Immigration Countries:** In countries with traditionally low immigration, the Europe+ scenario mitigated the projected population decline, potentially stabilizing or even increasing the population in some cases. However, dependency ratios remained relatively unaffected in these countries. The main impact of altered immigration origins is the spatial redistribution of the population across Europe. While total population change is small, some countries experienced substantial shifts in projected population size.

The findings suggest that while changes in the composition of immigration flows by region of origin can significantly alter the population size of specific European countries, the impact on aggregate demographic and labor force trends at the European level is limited. The relatively small impact of changes in immigration origin on dependency ratios, despite variations in fertility and labor force participation rates based on origin, can be attributed to several factors. First, the initial fertility gap between immigrants and natives converges rapidly. Second, differences in labor force participation, even considering variations by origin, do not significantly affect national labor force participation rates due to a convergence over time and a limited proportion of individuals with low participation rates. Third, the impact of educational attainment differences based on origin is small. While the model accounts for these differences, their effect on aggregate dependency ratios is minimal. These results are consistent with the established literature suggesting a limited impact of international migration on age structure and overall living standards. The study highlights that while changing immigration origins can reshape the population distribution, efforts focused on immigrant selection and economic integration are crucial for maximizing the potential benefits of increased immigration.

This study demonstrates that substantial changes in the composition of future immigration flows based on immigrants' regions of origin have limited impact on aggregate demographic and labor force trends across Europe. While spatial distribution of the population is affected, modifying age structure, labor force participation, or dependency ratios requires more significant changes beyond variations in immigrant origins. The findings underscore the importance of strategies focused on economic integration and migrant selection to optimize the impact of immigration. Future research should focus on broader socioeconomic consequences and long-term generational impacts of changing immigration compositions.

This study assumes constancy in immigration flow composition, immigrant characteristics and behaviors, and labor market integration processes. This simplification, while necessary for the model, may not fully reflect real-world complexities. Furthermore, the study focuses on a limited set of demographic indicators, and other factors beyond those considered may also be affected by changing immigration origins.