Will stopping immigration cause labor shortages?

Short answer: Often yes, especially in specific sectors — but it depends on the economy, the sector, and what else changes alongside the immigration restriction.

The core economic logic

Immigrants aren't just "extra people" — they fill specific slots in the labor market, often in jobs with:

When immigration is restricted, those specific gaps don't automatically get filled by native workers — labor markets are segmented, not perfectly interchangeable.

Real-world evidence this is happening right now

United States (2025 immigration crackdown):
The U.S. Department of Labor itself acknowledged that in documents filed to the Federal Register, the Department of Labor warned of a "current and imminent labor shortage" on American farms that "presents a sufficient risk of supply shock-induced food shortages." The department even cited research showing a 10 percent decline in the agricultural workforce would result in a 4.2 percent reduction in farm output and a 5.5 percent decline in farm revenue, and noted that approximately 42 percent of the U.S. crop workforce are unable to enter the country, potentially subject to removal or voluntarily leaving the labor force.

Data backs this up: the agricultural industry saw a total drop in employment of 155,000 workers from March 2025 to July 2025 — compared to a 2.2% increase in March 2024 to July 2024.

Critically, the "natives will fill the gap" theory hasn't played out as predicted: experts warned mass deportation would result in agricultural labor shortages, which could then lead to food shortages, Trump officials predicted U.S.-born workers would happily fill those vacant jobs. So far, that hasn't happened.

United Kingdom (post-Brexit):
This is probably the clearest natural experiment. When free movement with the EU ended, by June 2022, there was a significant shortfall of around 460,000 EU-origin workers, partly but not wholly compensated for by an increase of about 130,000 non-EU workers. The net loss of workers – around 330,000 – is 1 per cent of the labour force.

The shortages weren't evenly distributed — they hit low-wage sectors hardest: transport and storage, wholesale and retail, and accommodation and food saw the biggest reductions. Meanwhile, in more skilled sectors, such as healthcare, education and ICT, an increase in non-EU workers more than compensated for losses of those from the EU — showing the effect is sector-specific, not universal.

Importantly, researchers found the "natives will adapt" prediction mostly failed in the UK too: as yet there is little evidence either of non-UK workers being substituted by UK ones or of wages responding.

It's not always a shortage — nuance matters

A more careful academic analysis notes the shortage isn't purely immigration-driven: high vacancies and low unemployment have been a feature of post-pandemic labour markets, including in several other countries that have not changed their immigration policies. Recruitment difficulties in some low-wage industries have resulted in part from longer-term problems with unattractive pay or working conditions. The end of free movement appears to have exacerbated these existing problems rather than single-handedly creating them.

In theory, markets can adjust: employers can respond to labour shortages in different ways, including switching from EU to non-EU workers; raising wages (and prices) to attract workers from the existing labour force; or reducing their need for staff by turning to automation or by changing the mix of what they produce.

Bottom line

Stopping or sharply restricting immigration tends to cause real labor shortages in specific sectors — especially agriculture, construction, hospitality, and eldercare — because these jobs rely heavily on immigrant labor that native workers don't readily replace, at least not in the short run. Over a longer horizon, economies can partially adjust through automation, wage increases, or shifting what they produce, but these adjustments are slow, costly, and don't fully offset the gap, as both the UK and US examples show. The effect also depends heavily on the age structure and existing labor-force participation of the native population — countries with aging workforces (like the UK or Japan) feel this more acutely than those with abundant working-age native labor.