Will stopping immigration cause labor shortages?

Stopping immigration and labor shortages is a debated economic question — I'll gather the latest evidence on how migration affects workforce supply.

Short answer: In most advanced economies today - yes, especially over time - but the size, timing and distribution of shortages depends on demographics, sector and what replaces immigration.

1. Stopping immigration shrinks the labor supply quickly

Models of a sudden plunge in immigration show it:

> reduces the labor force available to fill jobs that businesses expect to fill, which Brookings models say will dampen employment, GDP, and consumer spending and push sustainable monthly job growth well below historical norms—perhaps to 20,000–50,000 or even negative territory in 2026

Estimates for the U.S. under a restrictionist scenario:

> These policies, which include restrictions on both legal and illegal immigration, have reduced the labor force by an estimated 6.8 million workers by 2028, with 4 million attributed to crackdowns on undocumented immigration and 2.8 million linked to changes in legal immigration rules

And:

> The National Foundation for American Policy estimates the workforce will shrink by 6.8 million by 2028, including 2.8 million fewer workers due to legal immigration changes and 4 million fewer due to illegal immigration policies, and by 15.7 million by 2035

Other analysis: restrictive measures including elimination of TPS and DACA

> could remove 1.4 million workers from the labor force, reducing GDP by $5 trillion over a decade

Conclusion in recent reviews:

> Tightened immigration controls are directly linked to growing labor shortages in key sectors of the U.S. economy.

2. Why shortages appear - demographics

In countries with low fertility and aging populations, immigration is the only source of working-age population growth.

> without the immigration surge of 2022 to 2024, the US working-age population would have been shrinking. ... The prime-age labor force grew in large part because of immigration

> without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025

The same pattern is visible in Europe and Asia:

> both Germany and Italy are experiencing shrinking workforces due to declining birth rates and rapidly aging populations

> Until recently, Japan avoided immigration to address worker shortages. Now, with the oldest population on earth, the country faces labor and income tax drains

Economist Jesper Koll:

> The number one reason Japanese companies go bankrupt is because they can't attract labor.

Japan data:

> around 85% of municipalities actively seeking additional workers to sustain basic industries and services.

> A shrinking labor force—projected to be short 11 million workers by 2040

South Korea, Japan, Germany, Italy, Spain are now actively expanding work visas because

> Declining birth rates, aging populations, youth emigration, and shifting career preferences have created structural gaps that threaten economic growth

Over the long run, CBO projects that net immigration will account for population increases by the 2030s, so sustained low immigration accelerates aging and reduces prime-age workers.

3. Shortages are sector-specific and regional, not economy-wide and uniform

Industries with an above-average share of foreign workers are hit hardest. For example:

> industries such as construction, leisure and hospitality, and other services ... had an aboveaverage share of foreign workers in 2015 and experienced an aboveaverage increase in job vacancy rates from 2016 to 2021

And current contracting:

> This labor force contraction has created acute shortages in sectors reliant on immigrant labor, such as retail, logistics, and healthcare

U.S. Labor Department filing Oct 2:

> The near total cessation of the inflow of illegal aliens combined with the lack of an available legal workforce,'' the Labor Department said ... results in significant disruptions to production costs and (threatens) the stability of domestic food production

Brookings city-level study of the 2025 ICE enforcement surge:

> The enforcement surge cost 668,000 jobs. Across the cities with the sharpest rise in ICE arrests, employment fell 0.73% below what they would have seen absent the surge

> In these 86 surge cities, ICE made around 52,000 excess arrests. But arrests are only a proxy for a far broader disruption ... Each excess arrest ... is associated with 13 jobs lost overall

And they find:

> They find that immigration enforcement reduced construction employment for American-born workers and slowed homebuilding

4. Will native workers or automation fill the gap?

The argument that stopping immigration creates jobs for native-born workers is not supported by recent evidence:

> Native workers aren't gaining; immigrants complement, not displace, the workforce

> So if we’ve had a big withdrawal of immigrants from the labor force, we don’t see any sign of the US-born workers getting more employment because of that.

Similarly:

> Applying findings from Cox and East (2026), we estimate that, out of the 668,000 jobs lost, 51,000-297,000 would have been held by American-born workers.

In practice:

> firms respond to labor shortages by increasing workload intensity, automation, or hiring fewer workers at the same wage rather than meaningfully raising pay.

Automation, higher wages, labor-force participation of natives, and offshoring can mitigate shortages in some occupations over a longer horizon, but studies find they do not fully offset them in the short to medium term, especially for physically demanding, low-wage, seasonal, or care jobs that native workers are less willing to do at current wages and conditions.

> undocumented workers often work the unpleasant, back-breaking jobs that native-born workers are not willing to do

> Chronic labor scarcity persists, underscoring deep structural issues: an aging and shrinking population, limited immigration, and the slow diffusion of automation.

5. Bottom line

Whether this counts as a "shortage" vs. a "tight labor market adjusting via wages and automation" is partly definitional. Economics predicts markets will eventually adjust, but adjustment means higher costs, less output, delayed construction and care, and slower growth - not a painless substitution.