Any nation that attempts to block mobility of both labor and capital leaves itself with no remaining option but economic stagnation. If a labor-short country blocks both immigration and imports of labor-intensive goods, for example, domestically produced labor-intensive goods will become increasingly expensive, reducing real incomes. If a capital-short country blocks both foreign investment and imports of foreign equipment and know-how, then real output and income per worker will remain depressed.
Taxes and transfers complicate the picture. Aging populations of industrial countries could provide a more skilled and stable workforce, but not if taxes on work and subsidies for retirement virtually compel premature retirement. Japan, Europe and the United States are going to have to take work incentives more seriously. In the United States, for example, those foolish enough to keep working after age 65 continue paying taxes for Social Security and Medicare without receiving any added benefits. No private retirement or health program would dare try charging such a high fee for nothing.
Taking the politics out of retirement planning and giving people much more freedom to take care of their own futures could do a lot to solve what politicians wrongly perceive as a demographic problem. Any remaining demographic difficulties can easily be managed through free trade in goods, services and capital. Nations with free and open economies, frugal governments and predictable regulatory regimes will prosper regardless of demographics.