When we started 2015, there was a lot of hope for a European economic recovery this year. That recovery has not panned out.  Instead, we’ve seen the Greek drama produce an economic and existential crisis for the whole eurozone, and now the migrant crisis is forcing every nearly every European country to take some action.

Immigration is one of those issues that is, by definition, highly emotional, in contrast to the cold hard analysis of economics.  But when you consider the demographics of Europe, you may view the immigration issue in Europe in a different way.

The demographics of Europe are revealing some significant long-term issues.  For some time now, birth rates have been dropping, even as Europe offers its workers and citizens some of the most generous and family-friendly policies in the world.  Germany's declining birth rate is the most striking.  It is estimated that Germany will lose 10 million people between 2020 and 2060, and the remaining population will become much older. 

An older population, of course, needs a younger population to support it.  For the European Union as a whole, the old-age dependency ratio — that is, the percentage of the population over 65 compared to that between 15 and 64 — is estimated to rise from about 28 percent to 50 percent by 2060.  That percentage in Germany specifically is estimated to be even starker — nearly 60 percent — while other countries will see lower ratios.  The United Kingdom, for example, is expected to see its old-age dependency ratio rise to 43 percent.

Purely mathematically, it would seem that immigration is the obvious answer for helping to stem the aging tide, since younger families settling in Europe will fill in some of the vacancies left as fewer babies are born in these countries.  But we all know that when it comes to immigration, a pure cost-benefit ratio cannot be separated from the more emotional issues and impacts.  Immigration affects many more aspects of a country than mere economic ones — including culture, religion, and politics.   

Our View:   In the short term, Europe will struggle with this new challenge. But Europe has faced struggles like this in the past. It is important to remember that while there are potentially divisive aspects to immigration, the positive impacts can help Europe in the future.

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