Will stopping immigration cause labor shortages?

Yes, stopping (or sharply restricting) immigration is likely to cause or significantly exacerbate labor shortages in many sectors and slow overall labor force and economic growth, particularly in the short-to-medium term. This is supported by demographic trends, recent policy experiences, historical episodes, and economic research. Effects are not uniform across all jobs or workers, and markets adjust over time (via higher wages, automation, internal migration, reduced output, or offshoring), but adjustments are imperfect, costly, and incomplete—especially for physically demanding, low-skill, or location-specific roles that natives often avoid.[1]

Demographic Reality

Developed countries like the US face aging populations and below-replacement fertility. The native-born working-age population has stagnated or begun shrinking in recent years. Immigrants have driven the large majority (often 80%+) of recent US labor force growth.[2][3]

Without immigration, "potential" monthly nonfarm payroll growth could fall dramatically (e.g., estimates from near 100k+ toward under 10k–60k or even near zero/negative in some projections), constraining GDP growth. Similar pressures exist in Europe, South Korea, and elsewhere. Global talent shortages are projected in the tens of millions by 2030.[1][4]

Recent Evidence from Restrictions and Slowdowns

In the US around 2025–2026, sharp drops in net migration (potentially negative for the first time in decades due to enforcement, deportations, and policy changes) coincided with:

Studies of unauthorized immigration flows find near one-for-one effects on employment growth in affected industries; slowdowns reduce overall employment (not just shift it to natives). Firm-level evidence from H-2B visa lotteries (low-skill temporary visas) shows that restricting access shrinks production, investment, and profits, with very low substitutability between immigrant and US workers. Effects on US employment are zero or positive from more immigrants (especially in rural areas).[8][9]

South Korea’s sudden halt of its low-skilled guest worker program (EPS) during COVID border closures provides a clean natural experiment: the EPS workforce shrank ~22%. Firms more dependent on these workers saw higher closure rates (especially low-productivity ones), revenue/production losses, and no meaningful increase in new native hiring. Surviving firms’ Korean workers experienced wage declines due to occupational downgrading into lower-skill tasks previously done by immigrants—indicating complementarity rather than pure substitution. Firms demanded more guest workers.[10][10]

Historical Precedents

Why Shortages Occur (and Why Natives Don't Fully Fill Gaps)

Broader research (including national-level analyses) typically finds immigration has small/zero average effects on native wages (or positive for less-educated natives via complementarity in recent decades) and can raise native employment rates. Large-scale removals shrink the economy (GDP estimates of multi-percentage-point hits in extreme scenarios), with limited lasting native wage gains after capital adjusts downward.[17][16]

Nuances and Adjustments

Stopping immigration entirely is an extreme counterfactual. Targeted reductions, enforcement focused on criminals, or shifts toward high-skill immigration have different (often milder) effects than blanket halts or mass deportations of workers already in the labor force. Legal temporary/guest worker programs calibrated to shortages can mitigate issues without full permanent settlement.

Markets do adapt: automation (where feasible), higher native participation or wages drawing some workers, reduced scale of production, or imports. These take time, raise costs (contributing to inflation in housing, food, care), and may leave permanent output losses or lower living standards growth. Productivity and innovation can also suffer if high-skill inflows or entrepreneurship drop.

Other policies matter: improving education/training, reducing barriers to work, housing/infrastructure to support mobility, and cultural factors influencing job attractiveness. Fiscal/net fiscal impacts of immigration vary by skill/education and are debated separately from pure labor supply.

In summary, the weight of evidence from economics, history, and current data indicates that abruptly stopping immigration causes labor shortages—especially acute ones in key sectors—while failing to deliver broad employment or wage booms for natives. It constrains growth in aging societies. Gradual, selective, or market-responsive immigration (legal pathways matching labor needs) better balances supply with demand than sudden stops.