Non-OECD immigration raises OECD labor productivity and investment
A one percentage point increase in non-OECD net immigration raises real GDP per worker across 38 OECD countries by 1.2 percent over five years and 1.9 percent over ten years. The gains stem primarily from capital investment and high-skilled labor inflows between 1990 and 2024.
Capital deepening drives productivity gains
Between 1990 and 2024, net immigration from non-OECD economies became the sole driver of labor force growth across OECD nations as native working-age populations contracted.
Empirical estimates across 38 countries show that a one percentage point rise in net immigration increases capital per worker by 1.57 percentage points within five years and 2.87 percentage points over a ten-year horizon.
Cumulative real GDP per worker expands by 1.896 percent over ten years, with capital accumulation accounting for 1.2 percentage points and total factor productivity adding 0.3 percentage points.
By contrast, domestic native population growth shows no statistically meaningful effect on output per worker.
Skilled inflows dominate the expansion
More than 81 percent of net immigration to OECD economies consisted of workers with tertiary education, exceeding the native skill ratio.
High-skilled arrivals generate a 1.294 percentage point increase in ten-year total factor productivity and expand destination human capital, whereas low-skilled inflows exhibit a neutral impact on productivity and physical capital.
The productivity boost persists across large immigration waves, with no signs of saturation at higher immigrant population shares.
Growth engine with localized frictions
The paper refutes the notion that inflows dilute capital or depress national productivity.
Yet relying on macro local projections leaves causal claims vulnerable to destination demand shocks.
Realizing these gains requires targeted domestic policies to manage localized transition costs.