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Grok 4.5Sep 28, 2026x-ai/grok-4.5-20260708

Will stopping immigration cause labor shortages?

Yes, sharply reducing or stopping immigration is highly likely to cause or significantly worsen labor shortages in many developed economies, particularly the United States, due to demographic trends, the scale of immigrant participation in the workforce, and evidence from recent policy shifts and economic studies. Immigrants do not simply "take jobs" in a zero-sum way; they expand the labor supply in ways that often complement native workers, fill hard-to-staff roles, boost demand, enable firm expansion, and support overall economic growth.[1]

Demographic and Labor Force Realities

Native-born working-age populations in the US (and many other rich countries) are stagnating or shrinking due to low fertility rates and aging. Immigrants have accounted for a large share—or nearly all—of recent labor force growth. For example:

•Foreign-born workers make up roughly 20% of the US labor force.
•Between periods like 2022–2024, the foreign-born labor force grew much faster than the native-born one.
•Projections show the US-born working-age population (roughly ages 20–64) shrinking over the next decade without immigration, making immigration essential for sustaining labor force growth and "normal" GDP growth rates. Halving net immigration could cut annual GDP growth by ~0.2 percentage points; reducing it to zero could cut it by ~0.4 points.[2]

Similar pressures exist in Europe, Japan, and South Korea, where aging and low birth rates create structural shortages. Japan and South Korea long maintained highly restrictive policies and face acute shortages in manufacturing, construction, agriculture, and care work; both have gradually expanded pathways for foreign workers (e.g., Japan’s Specified Skilled Worker program) while still keeping overall immigration levels relatively low.[3]

Evidence from Recent Reductions

Recent US declines in net immigration (and increased enforcement/deportations) have already shown effects:

•Payroll growth slowed dramatically (e.g., averages dropping from ~166,000/month to much lower figures like 29,000 in late periods).
•Sustainable monthly job growth estimates fell sharply (potentially toward 20,000–50,000 or lower).
•Shortages intensified in agriculture (Labor Department warnings of supply shocks and food risks, as natives often do not fill these roles even at higher wages), hospitality/restaurants/hotels (hundreds of thousands of vacancies, service quality declines), construction, food processing, healthcare/caregiving, and other sectors.[4]
•Immigrants leaving or not arriving reduces not only direct labor but also related jobs and demand (e.g., studies of enforcement find net job losses for natives as businesses scale back).[5]

Immigration surges earlier helped cool overheated post-pandemic labor markets by filling vacancies and moderating wage pressures in shortage industries.[6]

How Immigration Interacts with Labor Markets

Economic research (including meta-analyses and national skill-cell or local labor market studies) generally finds:

•Small or negligible average effects on native wages and employment, often positive overall due to complementarities (immigrants and natives specialize in different tasks/occupations; natives may upgrade to higher-paying roles). Immigrants create demand (as consumers) and enable firm growth/scale, which can increase native hiring.[7]
•Positive effects on less-educated natives’ wages in some estimates (e.g., +1.7% to +2.6% from 2000–2019 inflows) via complementarity and occupational upgrading. High-skilled immigration particularly boosts productivity, innovation, investment, and TFP.[8]
•No fixed "lump of labor"—more workers expand the economy. Deportations or restrictions often reduce native employment slightly as activity contracts.[9]

There is debate: Some economists (e.g., Borjas) find more negative effects concentrated on prior immigrants or the lowest-skilled natives. Short-run adjustments can involve friction. Critics also argue heavy reliance on immigration can reduce incentives for automation, training, or better wages/conditions ("lazy solution"). Labor scarcity can spur productivity-enhancing tech and higher wages in some models.[10]

However, the bulk of evidence and real-time data from reductions point to shortages rather than smooth native substitution, especially for physically demanding, seasonal, low-wage, or location-specific jobs that natives are less willing/able to fill at prevailing conditions. Wage increases alone often do not fully close gaps quickly due to mobility, preferences, skills mismatches, or demographics (e.g., aging natives).

Nuances and Caveats

•Not uniform: Effects vary by skill level, sector, legality/status (unauthorized workers face different dynamics), and whether immigration is sudden/large vs. gradual/selected. High-skilled inflows (e.g., STEM) often have clearer productivity benefits; low-skilled fill essential gaps but can involve more debate on fiscal/wage distribution.
•Other levers exist: Higher labor force participation, delayed retirement, automation/AI, education/training, family policies to raise fertility, or temporary/circular migration programs. These help but are unlikely to fully offset large immigration cuts given the scale of demographic gaps (global talent shortages projected in tens of millions).
•Broader trade-offs: Immigration involves non-economic issues (housing, services, social cohesion, fiscal costs/benefits varying by skill and status, border security). Targeted legal pathways for shortage occupations can mitigate shortages while addressing other concerns better than abrupt stops.[11]
•Context matters: In tight markets, immigration eases shortages without major native displacement. In slack markets, effects differ.

In summary, for countries like the US with slowing native labor force growth and heavy immigrant reliance in key sectors, stopping immigration would cause meaningful labor shortages, slower job and GDP growth, higher costs/prices in affected industries, and reduced economic dynamism—effects already visible in recent data. Complements like productivity gains from scarcity are possible but incomplete substitutes for labor supply in the near-to-medium term. Policy design (legal, skills-targeted, enforceable) matters more than binary open/closed approaches.

Citations (11)

  1. 1cato.orgNonprofits and think tanks
    https://www.cato.org/cato-journal/fall-2017/how-immigration-affects-workers-two-wrong-models-right-one

    Backs: “Immigrants do not simply "take jobs" in a zero-sum way; they expand the labor supply in ways that often complement native workers, fill hard-to-staff roles, boost demand, enable firm expansion, and support overall economic growth.”

  2. 2epi.orgNonprofits and think tanks
    https://www.epi.org/publication/the-u-s-born-labor-force-will-shrink-over-the-next-decade-achieving-historically-normal-gdp-growth-rates-will-be-impossible-unless-immigration-flows-are-sustained/

    Backs: “Halving net immigration could cut annual GDP growth by ~0.2 percentage points; reducing it to zero could cut it by ~0.4 points.”

  3. 3migrationpolicy.orgNonprofits and think tanks
    https://migrationpolicy.org/article/japan-korea-immigration-evolve

    Backs: “Japan and South Korea long maintained highly restrictive policies and face acute shortages in manufacturing, construction, agriculture, and care work; both have gradually expanded pathways for foreign workers (e.g., Japan’s Specified Skilled Worker program) while still keeping overall immigration levels relatively low.”

  4. 4washingtonpost.comNews and mediaquality 0.82
    https://www.washingtonpost.com/opinions/2026/04/14/immigration-crackdown-causes-massive-shortages-unskilled-labor/

    Backs: “Shortages intensified in agriculture (Labor Department warnings of supply shocks and food risks, as natives often do not fill these roles even at higher wages), hospitality/restaurants/hotels (hundreds of thousands of vacancies, service quality declines), construction, food processing, healthcare/caregiving, and other…”

  5. 5theglobeandmail.comNews and mediaquality 0.82
    https://www.theglobeandmail.com/world/us-politics/article-how-curbing-immigration-is-hurting-the-us-economy/

    Backs: “Immigrants leaving or not arriving reduces not only direct labor but also related jobs and demand (e.g., studies of enforcement find net job losses for natives as businesses scale back).”

  6. https://www.kansascityfed.org/research/economic-bulletin/rising-immigration-has-helped-cool-an-overheated-labor-market

    Backs: “Immigration surges earlier helped cool overheated post-pandemic labor markets by filling vacancies and moderating wage pressures in shortage industries.”

  7. 7epi.orgNonprofits and think tanks
    https://www.epi.org/publication/u-s-benefits-from-immigration/

    Backs: “Immigrants create demand (as consumers) and enable firm growth/scale, which can increase native hiring.”

  8. 8ssrn.comAcademic
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4810604

    Backs: “High-skilled immigration particularly boosts productivity, innovation, investment, and TFP.”

  9. 9brookings.eduNonprofits and think tanks
    https://www.brookings.edu/articles/the-labor-market-impact-of-deportations/

    Backs: “Deportations or restrictions often reduce native employment slightly as activity contracts.”

  10. 10ft.comNews and mediaquality 0.93
    https://www.ft.com/content/1b934ad7-7ea8-477a-8baf-fcb82bb643ca

    Backs: “Labor scarcity can spur productivity-enhancing tech and higher wages in some models.”

  11. 11foreignaffairs.comNews and mediaquality 0.91
    https://www.foreignaffairs.com/united-states/how-win-immigration

    Backs: “Targeted legal pathways for shortage occupations can mitigate shortages while addressing other concerns better than abrupt stops.”