Immigration and Productivity Growth in the OECD

11/01/2026
Summary of working paper 35523
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This figure is a scatter plot with a fitted trend line titled “GDP Growth and Non-OECD Immigration to OECD Countries, 1990–2024.” It shows the relationship between the rate of immigration from non-OECD countries and changes in GDP per person in OECD countries. The y-axis is labeled “Change in GDP per person.” It ranges from −4% to +4% in increments of 2 percentage points. The x-axis is labeled “Non-OECD immigration rate.” It ranges from −3% to +3% in increments of 1 percentage point. Each blue hollow circle represents an individual observation. A dashed gray line shows the fitted linear trend across the observations. The chart contains 20 data points, most of which are clustered between an immigration rate of −1% and +1.25%. Points at the low end include one at an immigration rate of about −2.3% with a GDP change of about −2.5%, and one at about −1.2% with a GDP change of about −3.4%. Points at the high end include one at about +0.8% with a GDP change of about +2.8%, and one at about +2.1% with a GDP change of about +3%. Within the central cluster, GDP changes vary widely, from about −3.3% to about +2.4%. The dashed trend line slopes upward, running from about −2.6% at an immigration rate of −3% to about +2.2% at an immigration rate of +3%, and crosses zero near an immigration rate of 0%. Overall, the chart indicates a positive relationship between non-OECD immigration and GDP growth per person, though individual observations are widely dispersed around the trend. A note on the figure reads: The change in GDP per person is the log difference of real GDP per capita between years t and t − 5. The non-OECD immigration rate is defined as the change in the stock of immigrants from non-OECD countries between years t and t − 5 as a share of the 1990 population. The source line reads: Researchers’ calculations using data from the United Nations and the Penn World Tables.

Birth rates across Organisation for Economic Co-operation and Development (OECD) countries have fallen in recent decades and native working-age populations have begun to shrink. At the same time, immigration—particularly from lower- and middle-income countries outside the OECD—has risen sharply. It has become the main source of labor force growth in much of Europe. In Immigration and Macroeconomic Outcomes in OECD Countries (NBER Working Paper 35523), Gaetano Basso, Mitali R. Mathur, and Giovanni Peri examine how immigration correlated with growth in GDP per worker, investment, human capital, and productivity across OECD economies over the 1990 to 2024 period.

GDP growth per worker was positively correlated with non-OECD immigration to OECD countries between 1990 and 2024, but not with native population growth.

The researchers measure net immigration—the five-year change in the stock of foreign-born residents as a share of the initial adult population—for 38 OECD countries, drawing on United Nations, OECD, and Eurostat census-based sources. They combine this with Penn World Tables data on GDP per capita, GDP per worker, capital per worker, human capital, and total factor productivity (TFP).

Non-OECD immigration accounted for most of the overall rise in immigration to OECD countries over this period and was, on average, evenly split between college-educated and non-college-educated arrivals—making immigrants more skilled than the native population in the large majority of country-period observations. Immigration policy indices and origin-country push factors explained little of the substantial variation in immigration rates across countries; large, unpredictable immigration shocks and surges were common.

The researchers estimate that a rise in the non-OECD immigration rate equal to 1 percent of the adult population was associated with 1.2 percent higher growth in GDP per worker within five years and 1.9 percent higher growth over ten years. Native population growth, by contrast, showed no significant association with GDP per worker and had a negative correlation at the five-year horizon. Additionally, for each percentage-point rise in the immigration rate, capital per worker rose 1.6 percentage points in the first five years and 2.9 percentage points in the next ten. Native population growth showed no comparable effect on investment.

High-skilled immigration was associated with significantly faster growth in human capital and TFP over the longer run, along with a marginally significant increase in GDP per worker. Low-skilled immigration mechanically lowered the human capital index but had no statistically significant effect on TFP, capital-per-worker, or GDP-per-worker growth. The per-unit effect on capital-per-worker growth was somewhat smaller in countries with larger existing immigrant shares, though the overall boost to GDP-per-worker growth did not decline substantially within the observed range of immigrant inflows. Sudden, less predictable episodes of high immigration produced similarly positive effects on investment, with capital per worker rising by a statistically significant 3.3 percentage points over 10 years following a surge.

The researchers estimate that Canada’s 17-percentage-point rise in immigrant population share between 1990 and 2024 was associated with a 19.9 percent increase in GDP per worker—more than half of the country’s actual 33 percent growth over that period. Comparable calculations imply that immigration accounted for about one-quarter of GDP-per-worker growth in the United Kingdom and roughly one-sixth in France.

Related

Researchers

Gaetano Basso
Mitali R. Mathur
Giovanni Peri

Topics

International Economics
International Factor Mobility
Labor Economics
Unemployment and Immigration
Development and Growth
Growth and Productivity

Programs

Economic Fluctuations and Growth
International Finance and Macroeconomics
Labor Studies
Productivity, Innovation, and Entrepreneurship

Articles

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