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:
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:
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:
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
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)
- 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.”
- 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.”
- 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.”
- 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…”
- 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).”
- 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.”
- 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.”
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4810604
Backs: “High-skilled immigration particularly boosts productivity, innovation, investment, and TFP.”
- https://www.brookings.edu/articles/the-labor-market-impact-of-deportations/
Backs: “Deportations or restrictions often reduce native employment slightly as activity contracts.”
- https://www.ft.com/content/1b934ad7-7ea8-477a-8baf-fcb82bb643ca
Backs: “Labor scarcity can spur productivity-enhancing tech and higher wages in some models.”
- 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.”