Changing migration patterns and their relevance to population aging and monetary policy in Europe (OeNB Bulletin Q2/25)

Geopolitics have always crucially shaped migration patterns, and this effect is likely to increase for the foreseeable future. However, the concrete effects of changing migration patterns on population aging and their potential implications for monetary policy are largely unexplored. Moreover, for many European countries, we do not know much about the specific age distribution of migrants from different origins. This makes it difficult to evaluate how changes in migration patterns might affect the overall age structure in the receiving countries. In this study, we attempt to fill part of this gap by looking at the bilateral age distribution of migration and its potential monetary policy implications. To do so, we first establish that age and its distribution across societies matters in price trends and that migration has always affected the age distribution in Europe by presenting key findings from the literature. Subsequently, we demonstrate the effect that migration has exerted on migration patterns in Europe and, specifically, in Austria by deriving the evolution of counterfactual old-age dependency ratios, demonstrating the proven potential of migration to alleviate population aging-related pressures (provided labor market integration is successful). Finally, we develop a simple and practical method to estimate bilateral age-specific migrant stocks, which can serve as an important foundation for future research and show the way bilateral permeability is shaping the age distribution of migrants. Our paper will thus lay essential foundations for further in-depth research on the interaction of monetary policy and migration.