Will stopping immigration cause labor shortages?

Leans yesSays it is contested

Whether stopping or severely restricting immigration will cause labor shortages is a central debate in modern economics and public policy.

The short-to-medium-term consensus among most economists is that stopping immigration triggers immediate, significant labor shortages in specific sectors and slows overall labor force growth. However, proponents of restricting immigration and some labor economists argue that in the long run, the market will adapt through wage increases, automation, and mobilization of the domestic workforce.

1. Arguments That Stopping Immigration Causes Labor Shortages

Those who argue that stopping immigration causes labor shortages point to demographic trends, sector-specific dependencies, and empirical economic data:

•Demographics and Aging Populations: Most developed nations (including the U.S., Japan, and much of Western Europe) have birth rates well below the replacement level of 2.1 births per woman. As the "Baby Boomer" generation retires, there are not enough native-born workers entering the workforce to replace them. Without immigration, the total size of the workforce in these countries is projected to shrink, making labor shortages inevitable across the board.

•Sector-Specific Dependency: Immigrants make up a disproportionately large share of the workforce in several critical industries:

•Agriculture: In many nations, the vast majority of crop-harvesting labor is foreign-born.

•Construction and Hospitality: These sectors rely heavily on immigrant labor to meet seasonal and physical labor demands.

•The "Care Economy": Eldercare, childcare, and healthcare depend on foreign-born workers to sustain operations as populations age.

•High-Skilled Tech and STEM: Specialized industries rely on global talent to fill highly technical positions where local supply is insufficient.

•The "Complementarity" Effect: Economists point out that immigrant and native-born workers rarely compete directly for the same jobs; instead, they complement each other. For example, hiring foreign-born agricultural workers to harvest crops creates downstream, higher-paying jobs for native-born workers in logistics, marketing, management, and food processing. Restricting the entry-level immigrant workforce can cause a bottleneck that reduces employment opportunities for native-born workers.

•Real-World Evidence: During periods of sharp immigration declines—such as during the COVID-19 pandemic or periods of strict policy enforcement—industries reliant on foreign labor historically experience rapid increases in unfilled job openings, crop losses, and construction delays.

2. Arguments That Stopping Immigration Does Not Cause Permanent Shortages

Proponents of restricting immigration argue that "labor shortages" are not a permanent physical reality but rather a temporary market imbalance that can be resolved through structural economic adjustments:

•Wage Adjustments for Native Workers: Some economists, such as George Borjas, argue that an abundance of low-skilled immigrant labor suppresses wages for the lowest-income native-born workers. If immigration is stopped, the restricted supply of labor forces employers to compete for workers by raising wages and improving working conditions.

•Mobilizing Idle Domestic Labor: Restrictionists point out that in many wealthy nations, millions of prime-age, native-born individuals (particularly those with lower levels of education) have dropped out of the active labor force entirely. They argue that raising wages—enabled by stopping cheap immigrant labor—would incentivize these discouraged native-born workers to re-enter the workforce, solving the "shortage" domestically.

•Incentive for Automation and Technology: When labor is cheap and plentiful, businesses have little reason to invest in expensive technology. A sudden scarcity of labor incentivizes companies to adopt automation, artificial intelligence, and advanced machinery. For example, countries like Japan, which have historically maintained very strict immigration policies, have heavily prioritized robotics and automation in manufacturing and eldercare to cope with their shrinking workforce.

•Business Restructuring and Downsizing: In some cases, a labor shortage simply forces an economy to restructure. Non-essential, low-productivity businesses that rely on low-wage business models may close or consolidate, shifting capital and surviving workers toward more productive sectors of the economy.

Summary of the Economic Trade-offs

Ultimately, whether stopping immigration "causes" labor shortages depends on the timeframe and a society's tolerance for economic transition:

1.In the short term: Stopping immigration almost certainly causes severe, disruptive labor shortages in agriculture, construction, service industries, and healthcare. This can lead to localized supply chain snarls, business failures, and upward pressure on consumer prices (inflation) as businesses pass higher labor costs onto consumers.

2.In the long term: The economy will eventually adapt and find a new equilibrium. However, this adaptation comes with trade-offs: either through higher consumer prices to cover higher domestic wages, massive capital investments in automation, or a smaller overall economic footprint (slower GDP growth).

Citations (12)

1bakerinstitute.orgNonprofits and think tanks
bakerinstitute.org
Backs: “Demographics and Aging Populations: Most developed nations (including the U.S., Japan, and much of Western Europe) have birth rates well below the replacement level of 2.1 births per woman.”
statistic, article, points to yes. Claim: Most developed nations have birth rates well below the 2.1 replacement level.
2americanprogress.orgNonprofits and think tanks
americanprogress.org
Backs: “Demographics and Aging Populations: Most developed nations (including the U.S., Japan, and much of Western Europe) have birth rates well below the replacement level of 2.1 births per woman.”
statistic, article, points to yes. Claim: Most developed nations have birth rates well below the 2.1 replacement level.
3wes.orgNonprofits and think tanks
wes.org
Backs: “Without immigration, the total size of the workforce in these countries is projected to shrink, making labor shortages inevitable across the board.”
evidence, article, points to yes. Claim: Without immigration the workforce is projected to shrink, making labor shortages inevitable.
4cfr.orgNonprofits and think tanks
cfr.org
Backs: “Sector-Specific Dependency: Immigrants make up a disproportionately large share of the workforce in several critical industries:”
evidence, article, points to yes. Claim: Immigrants make up a disproportionately large share of workers in several critical industries.
5econofact.orgAcademic
econofact.org
Backs: “The "Care Economy": Eldercare, childcare, and healthcare depend on foreign-born workers to sustain operations as populations age.”
evidence, article, points to yes. Claim: Eldercare, childcare, and healthcare depend on foreign-born workers as populations age.
6equitablegrowth.orgNonprofits and think tanks
equitablegrowth.org
Backs: “High-Skilled Tech and STEM: Specialized industries rely on global talent to fill highly technical positions where local supply is insufficient.”
evidence, article, points to yes. Claim: Specialized tech and STEM industries rely on global talent where local supply is insufficient.
7americanimmigrationcouncil.orgNonprofits and think tanks
americanimmigrationcouncil.org
Backs: “The "Complementarity" Effect: Economists point out that immigrant and native-born workers rarely compete directly for the same jobs; instead, they complement each other.”
evidence, article, points to yes. Claim: Immigrant and native-born workers complement rather than compete, so restricting immigrants hurts native employment.
8frbsf.orgGovernment
frbsf.org
Backs: “Real-World Evidence: During periods of sharp immigration declines—such as during the COVID-19 pandemic or periods of strict policy enforcement—industries reliant on foreign labor historically experience rapid increases in unfilled job openings, crop losses, and construction delays.”
evidence, article, points to yes. Claim: Sharp immigration declines lead to unfilled job openings, crop losses, and construction delays.
9cis.orgNonprofits and think tanks
cis.org
Backs: “Wage Adjustments for Native Workers: Some economists, such as George Borjas, argue that an abundance of low-skilled immigrant labor suppresses wages for the lowest-income native-born workers. If immigration is stopped, the restricted supply of labor forces employers to compete for workers by raising wages and…”
attribution, article, points to no. Claim: George Borjas and others argue low-skilled immigration suppresses wages for low-income native workers.
10house.govGovernment
house.gov
Backs: “If immigration is stopped, the restricted supply of labor forces employers to compete for workers by raising wages and improving working conditions. Mobilizing Idle Domestic Labor: Restrictionists point out that in many wealthy nations, millions of prime-age, native-born individuals (particularly those with lower…”
evidence, official document, points to no. Claim: Restricted labor supply forces employers to compete by raising wages and improving conditions.
11foreignaffairs.comNews and mediaquality 0.91
foreignaffairs.com
Backs: “Incentive for Automation and Technology: When labor is cheap and plentiful, businesses have little reason to invest in expensive technology. A sudden scarcity of labor incentivizes companies to adopt automation, artificial intelligence, and advanced machinery.”
evidence, article, points to no. Claim: Cheap plentiful labor discourages investment in technology; scarcity incentivizes automation.
12democratic-erosion.orgAcademic
democratic-erosion.org
Backs: “A sudden scarcity of labor incentivizes companies to adopt automation, artificial intelligence, and advanced machinery. For example, countries like Japan, which have historically maintained very strict immigration policies, have heavily prioritized robotics and automation in manufacturing and eldercare to cope with…”
evidence, article, points to no. Claim: Labor scarcity incentivizes companies to adopt automation, AI, and advanced machinery.