Will stopping immigration cause labor shortages?
Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in specific sectors and slow overall labor force growth, particularly in aging economies with low fertility rates—though markets adjust over time via higher wages, automation, reduced output, or other changes, and effects are not uniform.[1]
Immigrants make up a significant share of the workforce in many developed countries (about one-fifth in the US) and have been a primary driver of labor force growth as native-born populations age and birth rates decline. Without immigration, working-age populations in places like the US would have begun shrinking years ago.[2]
Recent Evidence from Immigration Slowdowns
In the US, net international migration dropped sharply in recent years (e.g., from millions annually to near-zero or negative in some 2025 estimates), coinciding with slower payroll growth and tighter conditions in immigrant-heavy industries.[3]
Similar dynamics appear in Europe and elsewhere, where demographic decline and skill shortages in SMEs lead to calls for more (not less) immigration pathways, even as anti-immigration politics rise.[6]
Economic Mechanisms
Labor markets follow supply and demand. Reducing immigrant inflows shrinks labor supply, which can:
Studies find immigration can alleviate shortages and dampen wage pressures without large negative effects (or with positive ones) on native employment/wages overall, due to imperfect substitutability and complementarities. Reducing it reverses this.[8]
A slowdown in low-skilled immigration has historically linked to service-sector shortages, higher low-skilled wages (narrowing the college premium), and sometimes lower incentives for native education/training, with productivity and price effects.[9]
Historical Precedents
These show that “shortages” often prompt capital/tech substitution or output reduction more than large native employment gains, especially for physically demanding or low-status jobs.
Caveats and Longer-Term Adjustments
In summary, stopping immigration would almost certainly produce labor shortages—or intensify existing ones—in immigrant-reliant sectors in the near term, constrain job and GDP growth, and challenge adjustment in aging societies. Historical and recent evidence shows natives do not automatically or fully replace them, and broader economic costs often materialize. Markets adapt, but the transition involves higher costs, reduced output in places, and slower expansion. Outcomes depend on the scale/speed of the stop, accompanying policies (e.g., training, automation incentives), and economic conditions.
Citations (13)
- https://www.deloitte.com/us/en/insights/topics/economy/spotlight/us-immigration-impact-us-economy.html
Backs: “Yes, sharply reducing or stopping immigration is likely to cause or worsen labor shortages in specific sectors and slow overall labor force growth, particularly in aging economies with low fertility rates—though markets adjust over time via higher wages, automation, reduced output, or other changes, and effects are…”
- https://www.business-standard.com/amp/immigration/immigration-fall-from-2-million-to-515-000-may-shrink-us-labour-force-fed-125112000258_1.html
Backs: “Without immigration, working-age populations in places like the US would have begun shrinking years ago.”
- https://www.reuters.com/markets/us/us-migrant-halt-may-wipe-potential-job-growth-2025-06-24/
Backs: “In the US, net international migration dropped sharply in recent years (e.g., from millions annually to near-zero or negative in some 2025 estimates), coinciding with slower payroll growth and tighter conditions in immigrant-heavy industries.”
- https://news.bloomberglaw.com/immigration/immigration-crackdown-fails-to-deliver-jobs-for-us-born-workers
Backs: “Businesses note fewer applicants even at higher pay, temporary site disruptions from enforcement, and production constraints.”
- https://www.dallasfed.org/research/economics/2025/0708?utm=
Backs: “Broader effects include lower potential GDP growth (estimates of 0.2–1 percentage point reductions in some years) as labor input declines, though productivity and capital adjustments matter.”
- https://mmr2025.mixedmigration.org/mmr/2025/labour-shortages-and-anti-immigration-stances/
Backs: “Similar dynamics appear in Europe and elsewhere, where demographic decline and skill shortages in SMEs lead to calls for more (not less) immigration pathways, even as anti-immigration politics rise.”
- https://www.forbes.com/sites/stuartanderson/2026/02/22/new-research-finds-reducing-immigration-does-not-help-us-workers/
Backs: “Immigrants often complement natives (e.g., filling manual roles while natives move into supervisory/higher-skilled ones) and boost demand via spending and entrepreneurship, so their absence can reduce overall job creation rather than free up slots one-for-one.”
- https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussion-Papers-2026/CFMDP2026-04-Paper.pdf
Backs: “Studies find immigration can alleviate shortages and dampen wage pressures without large negative effects (or with positive ones) on native employment/wages overall, due to imperfect substitutability and complementarities. Reducing it reverses this.”
- http://dx.doi.org/10.29338/wp2024-01
Backs: “A slowdown in low-skilled immigration has historically linked to service-sector shortages, higher low-skilled wages (narrowing the college premium), and sometimes lower incentives for native education/training, with productivity and price effects.”
- https://www.library.hbs.edu/working-knowledge/history-check-how-barring-immigrants-backfired-in-1880s-america
Backs: “White native employment and wages did not broadly rise as hoped (skilled white workers and managers declined in affected areas); western US manufacturing growth slowed for decades.”
- https://cepr.org/voxeu/columns/impact-immigration-barriers-native-workers-evidence-us-exclusion-mexican-braceros
Backs: “Adjustment came mainly via technology adoption (mechanization) and crop mix shifts, not native hiring.”
- https://economics.princeton.edu/working-papers/the-effects-of-immigration-on-the-economy-lessons-from-the-1920s-border-closure/
Backs: “Some analyses find faster low-skilled wage growth in more-affected markets; others show no broad wage boost for natives (or declines), accelerated automation in rural areas, and shifts to higher-skilled urban manufacturing, with incomplete replacement of low-skilled immigrant roles by natives.”
- https://fortune.com/article/does-america-have-aging-population-immigration-deportations-six-day-work-week/
Backs: “Options like longer working lives or higher fertility have limits; immigration (or temporary worker programs) is a primary lever.”