Can Global Migration Solve Labor Shortages in Aging Economies?

Clemens, Montenegro, and Pritchett (2019) ask whether international migration can help match countries with shrinking labor forces to those with rapidly growing working-age populations. They examine global demographic projections and economic data on labor supply, migration flows, and wage differences across countries. Their analysis shows that many high-income countries will experience large declines in working-age populations, while many lower-income countries will see large increases. They estimate that allowing workers to move from labor-surplus to labor-shortage countries could generate very large economic gains—often raising migrants’ earnings severalfold and producing global income gains measured in trillions of dollars annually.

Why This Article Was Selected for The Policy Scientist

Global demographic divergence—aging workforces in many high-income countries and rapidly expanding labor-age populations in parts of the developing world—has become one of the central structural challenges facing the global economy. This article examines whether international labor mobility could mitigate that mismatch, a question with significant implications for long-run economic growth and fiscal sustainability. Clemens and his collaborators have written extensively on migration and global labor markets, and this study builds on that established body of work. The analysis relies on large cross-national demographic and economic datasets, which are generally high quality and broadly comparable across countries. Because the paper relies primarily on demographic projections and macroeconomic modeling rather than causal inference strategies, future research using quasi-experimental methods would strengthen the empirical foundation of these claims.

Full Citation and Link to Article

Pritchett, L. (2026). Global labor mobility between shrinking and growing labor forces. Journal of Economic Perspectives, 40(1), 71–92. https://doi.org/10.1257/jep.40.1.71

Central Research Question

The article examines whether international migration can help reconcile a growing demographic imbalance between countries with shrinking labor forces and those experiencing rapid growth in their working-age populations. Many high-income countries are entering a period of sustained demographic decline driven by low fertility and population aging. At the same time, many lower-income countries—particularly in parts of Africa and South Asia—are experiencing rapid expansion of their working-age populations. The central research question is therefore straightforward: can greater global labor mobility help match labor supply in younger economies with labor demand in aging economies, thereby improving economic outcomes in both regions? The article explores the scale of this emerging demographic mismatch and evaluates the potential economic consequences if migration policies allowed workers to move more freely across national labor markets. The broader objective is to determine whether migration could function as a mechanism for reallocating labor globally in a way that mitigates demographic decline in advanced economies while providing employment opportunities for workers in countries with expanding labor forces.

Previous Literature

The article builds on a large body of research examining the economic effects of international migration. Earlier work has consistently documented that migration can generate large gains for migrants themselves, largely because workers move from lower-productivity environments to higher-productivity labor markets. Research by Clemens, Pritchett, and others has highlighted that these productivity differences across countries are often far larger than productivity differences across workers within a country. As a result, even workers with identical skills may earn several times more when working in a high-income country rather than a low-income country. This literature has emphasized that barriers to labor mobility represent one of the most consequential distortions in the global economy.

The present article extends that literature by focusing specifically on demographic divergence across countries. While earlier research emphasized wage differences and productivity gaps, this article examines the role of population aging and youth population growth in shaping future labor market dynamics. Several widely cited demographic studies have shown that fertility rates have fallen sharply across most high-income countries and many middle-income countries, leading to declining working-age populations. By contrast, many countries in sub-Saharan Africa and parts of South Asia are projected to experience large increases in the number of working-age individuals over the coming decades. The article situates migration within this demographic context and argues that the scale of the projected divergence in labor supply across countries is historically unprecedented. In doing so, it contributes to the literature by linking demographic projections with economic analysis of labor mobility.

Data

The analysis relies primarily on cross-national demographic and economic datasets. The demographic projections used in the article are derived from widely used population forecasts, including those produced by international statistical agencies. These projections estimate future population sizes by age group under a set of standard assumptions regarding fertility, mortality, and migration. The article focuses particularly on projected changes in the size of the working-age population across countries and regions over the coming decades.

In addition to demographic projections, the analysis draws on international economic datasets that measure wages, income levels, and labor market outcomes across countries. These datasets allow the authors to estimate the potential income gains that could result if workers were able to move from lower-income labor markets to higher-income ones. Because the data sources are widely used in cross-country research and are compiled by major international statistical institutions, they are generally considered reliable and broadly comparable across countries.

The data are global in scope and include both advanced economies and developing countries. This broad geographic coverage allows the analysis to examine demographic changes across multiple regions and to compare labor supply trends across different parts of the world. However, as with many cross-country datasets, measurement error and variation in statistical capacity across countries remain potential limitations. Nonetheless, the scale and scope of the datasets make them appropriate for examining long-run global demographic trends and their potential economic implications.

Methods

The article primarily employs descriptive demographic analysis combined with economic modeling to estimate the potential effects of labor mobility across countries. The authors analyze projected changes in working-age populations across regions and then compare those trends with differences in income levels across countries. Using these inputs, they estimate the potential economic gains that could result if workers were able to move from countries with expanding labor forces to countries experiencing labor shortages.

The analysis does not rely on randomized controlled trials or quasi-experimental causal inference techniques. Instead, it uses demographic projections and economic simulations to illustrate the scale of potential gains from labor mobility. This approach is common in macroeconomic and demographic research, particularly when studying long-run structural changes that cannot easily be evaluated using experimental methods.

However, the absence of causal identification strategies limits the ability to draw precise causal conclusions about the effects of migration policies. While the simulations illustrate the magnitude of potential economic gains, they rely on assumptions about wages, productivity differences, and migration flows that may not fully capture the complexities of real-world migration systems. Future research using natural experiments or other causal inference methods could strengthen the empirical evidence by examining how actual migration policy changes affect labor markets and economic outcomes across countries.

Findings/Size Effects

The article documents a striking demographic divergence between regions of the world. Many high-income countries—including those in Europe, East Asia, and parts of North America—are projected to experience substantial declines in their working-age populations over the coming decades. In contrast, several lower-income regions, particularly sub-Saharan Africa, are expected to experience very large increases in the number of working-age individuals. In some cases, the projected growth in the working-age population of these countries is measured in the tens or even hundreds of millions of additional workers.

These demographic changes imply that some countries may face persistent labor shortages while others may struggle to create enough jobs for rapidly expanding populations. The authors argue that migration could partially offset these imbalances by allowing workers to move from labor-surplus countries to labor-shortage countries.

The potential income gains associated with such migration are substantial. Consistent with earlier research, the article notes that migrants often experience large increases in earnings after moving to higher-income labor markets. In many cases, migrants’ wages increase by several multiples relative to what they would have earned in their home countries. Because these wage differences reflect productivity differences across economies rather than differences in worker ability, migration can generate large economic gains without requiring changes in workers’ skills.

The authors also emphasize that these gains are not limited to migrants themselves. Increased labor mobility could contribute to economic growth in destination countries by mitigating labor shortages and supporting production in sectors facing demographic decline. At the same time, remittances and other economic linkages may generate economic benefits for migrants’ countries of origin.

The analysis suggests that the global economic gains from expanded labor mobility could be extremely large, potentially measured in trillions of dollars annually. While the exact magnitude depends on assumptions about migration flows and labor market conditions, the central finding is that the economic effects of labor mobility are likely to be large relative to many other policy interventions affecting global economic welfare.

Conclusion

The article concludes that demographic divergence across countries is likely to become an increasingly important feature of the global economy. Aging populations and declining labor forces in many high-income countries contrast sharply with the rapid expansion of working-age populations in several developing regions. This divergence creates the possibility of large inefficiencies in the global allocation of labor if workers remain largely confined to their countries of birth.

International migration represents one mechanism through which these demographic imbalances could be partially addressed. By allowing workers to move from labor-surplus regions to labor-shortage regions, migration could improve the allocation of labor across the global economy and generate substantial income gains for migrants.

Although the article does not provide causal estimates of the effects of migration policies, it offers a framework for understanding the scale of demographic change and its potential economic implications. The analysis highlights the importance of considering demographic trends when evaluating the future of global labor markets. Future empirical research that exploits policy variation across countries could further clarify how migration policies influence economic outcomes in both sending and receiving countries.