In a December 2025 commentary, economist Kenneth Rogoff argues that the rising tide of anti-immigration sentiment in many wealthy countries isn’t just a political squabble: it’s an economic self-inflicted wound.
Rogoff notes that many advanced economies are confronting aging populations, shrinking workforces, and chronic labour-shortages. Yet political pressure is pushing in exactly the opposite direction: tougher restrictions on migration.
He warns that by “shutting the door on immigrants,” nations undermine their ability to adapt to rapid technological change, maintain innovation, and sustain long-term growth.
In effect, restricting immigration at this moment equates to taxing the future — a decision that may feel popular, but that carries serious costs in competitiveness, productivity, and payoffs from technological adoption. Recently Elon Musk also echoed similar sentiments.
At its core, his message: demographics aren’t optional — if labour supply and talent mobility dry up, so does growth.
What recent research & experts show — mostly the same
Rogoff’s warnings align closely with a growing body of research from institutions, economists and labour-market studies. Key takeaways:
Immigration as a solution to demographic and labour-market stress
· The recently released OECD International Migration Outlook 2025 shows that labour-market inclusion of migrants remains strong in many advanced economies. Migrant inflows continue to play an important role in filling shortage gaps.
· In tandem, the IMF’s 2025 “Silver Economy” analysis warns of a demographic crunch: shrinking working-age populations, rising dependency ratios, and fiscal pressure from aging. The report argues that policies facilitating labour-force participation — including through migration — will be critical to cushion the impact.
· A related 2025 working paper finds that, on average, immigration has a “positive and statistically significant” impact on macroeconomic performance in host countries — though the magnitude depends on the migrants’ qualifications and host-country characteristics.
Immigration supports innovation, productivity, and growth
· A 2025 cross-country study covering OECD nations shows migration has a positive effect on innovation output (e.g. R&D, patents) — though the authors also caution that in some settings it may coincide with downward pressure on minimum wages or lower-end wages.
· More broadly, literature going back decades has documented that immigrants — especially high-skill ones — contribute disproportionately to new businesses, entrepreneurship, patents and new ideas.
· Other scholars (e.g. Gianmarco Ottaviano and Giovanni Peri) emphasize that immigrants and natives often complement each other: immigrants take some tasks, natives others, improving overall task-allocation and productivity without necessarily displacing native employment.
The “migration bargain”: costs + benefits
· A recent 2025 article dubbed the “migration bargain” argues that while immigration brings short-term and long-term economic benefits (growth, innovation, labour supply), the costs — especially at local/facility level (services, public infrastructure, integration costs) — are borne by those communities most sensitive to them.
· In other words: the macroeconomic upside is real, but the benefits and burdens are often unevenly distributed. That tension helps explain the political backlash, even when the overall data leans positive.
Where some debate still rages — and why it matters
While many economists support the “open migration = growth + innovation” view, the picture isn’t unanimously rosy. Some caveats:
· Not all immigrants — or all host economies — benefit equally. Gains depend heavily on migrant skill profile, host-country policies, integration, and local labour-market conditions. The positive macro effects can obscure micro-level distributional tensions (wage pressure for low-skilled natives, competition in certain occupations, integration costs).
· A 2025 empirical paper argues that many past studies over-simplify. Its authors propose a new, more rigorous framework for measuring immigration’s impact — claiming that only by carefully tracking workers over time (rather than snapshots) can we reliably estimate immigration’s effect on wages, occupational mobility, and employment for natives.
· Politically and socially, even if economic metrics look good, populations may feel cultural, infrastructural, or social strain — often the hardest costs to quantify and the easiest to politicize.
Why it matters for investors & global macro observers
· Immigration policy is becoming a core macroeconomic variable, not a side issue. Countries that continue to welcome and integrate talent may sustain better long-term growth, innovation, and fiscal health. Countries that close borders may struggle with labour shortages, productivity stagnation, or inflationary pressure in key sectors.
· For global businesses — especially those in technology, manufacturing, services — talent mobility is no less important than capital flows. Restrictive migration may raise wage costs, reduce flexibility, and constrain growth plans.
· For countries like India — a known exporter of talent — shrinking immigration demand in developed markets may affect remittances, diaspora networks, and global outsourcing dynamics.
Bottom Line
Rogoff and Musk are ringing the alarm for good reason. The convergence of aging populations, shrinking labour forces, and rising technology-driven demand makes talent mobility more — not less — critical. Across research institutions and academic literature, a clear pattern emerges: well-managed immigration tends to boost economic performance, innovation, and labour supply, especially in nations that are running out of home-grown workers.
But — and this is important — the gains are real only when integration is handled properly, skill-mismatches are minimized, and distributional effects are addressed. Restrictive, populist policies may score short-term political points — but over the medium term, they risk undercutting the very engine of growth they claim to protect.
