Demographic aging and migration flows
Europe’s population is aging. To cope with this, migration flows tend to compensate for the imbalance between the working and non-working populations. How can we understand the impact of these flows?
In South Korea (ref. https://www.nber.org/papers/w34927), a full-scale experiment was carried out, a kind of laboratory experiment to determine the dynamics of employment when these migratory flows are reduced.
In this country, where The population is aging very rapidly, a procedure was put in place in 2004 to facilitate low-skilled jobs, known as EPS, for workers from Asian countries. They hold manual positions, particularly in the manufacturing sector, performing simple and repetitive tasks. Young Koreans, who are on average more educated, do not want these jobs.
In 2020, with Covid, the number of these workers was reduced by 20%.
The impact of this measure in three points. They contradict the idea that restricting immigration would boost employment and wages for native-born citizens.
1 - Excessive business failures.
Those companies most dependent on these EPS workers had a two to three times higher probability of closure than others. These are companies with limited financial margins and an inability to absorb the disruption.
2- Surviving firms exposed to EPS risk reported a loss of revenue and production.
They did not respond with increased automation, and native workers did not replace immigrants due to a lack of candidates for these positions.
3 – Korean workers did not benefit from the shortage.
There were no new hires of Koreans, there was retention of employees in post (maintenance of staff), a significant decrease in salaries because Korean employees were partly downgraded to fill the jobs that had been lost by the EPS.
Lessons from this experience for Europe
The parallel is not direct — economic structures, social protection systems and migration dynamics differ. But the mechanisms highlighted by the Korean study have universal implications: in an economy where low-skilled tasks remain essential to production, low-skilled immigrant workers are complements, not substitutes, for the native workforce.
Their presence allows local workers to specialize in higher value-added tasks. Their absence does not free up jobs for natives — it degrades the entire production system.
The migration debate cannot be reduced to a cultural or budgetary cost-benefit equation; these results suggest a different interpretation: that of the functional needs of an economy whose population growth alone can no longer ensure its survival. Ignoring this reality has a cost—for businesses, and for the workers we claim to protect.
Philippe Waechter is Ostrum AM chief economist in Paris
