Increasing life expectancy and declining birth rates are leading to big fiscal problems throughout Europe. Without fundamental changes, the rise in the relative number of older people and the slower growth of the labour force will substantially raise government outlays for pensions and healthcare.

A common reaction to this problem is a call for increased immigration. The taxes paid by these new workers would help to finance the benefits of the aged. Although there is general discomfort with some of the social consequences of increased immigration, many have concluded that increased immigration is the only way to avoid a big increase in tax rates or a cut in benefits.