Will stopping immigration cause labor shortages?

Leans yesSays it is contested

Stopping immigration and labor shortages — I'll gather recent data and forecasts to assess the link.

Short answer: Yes - in most advanced economies with aging populations and low birth rates, stopping immigration entirely would very likely worsen labor shortages and eventually shrink the labor force. The size and timing of the effect depends on the country, sector, and whether wages, automation or internal migration can substitute.

1. Why economists expect shortages

Demographic baseline: In aging countries, native-born labor force growth is already stagnating.

•Canada's labor force grew by 2.8 million people over the decade ending Sep 2024, with all growth driven by immigration as the Canadian-born labor force stagnated

•The Federal Reserve Bank of San Francisco found that without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025

•Indeed Hiring Lab: "The United States is aging, and immigrants, on average, are more likely to be of prime working age than native-born Americans" and "Without it, the U.S. will not just be facing a tighter labor market, but a shrinking one."

Reduced immigration contributes to labor shortages, driving inflationary pressures as the supply of immigrant-dependent goods and services shrinks.

Projected magnitude if flows stop or are sharply reduced:

•The CBO projects that reduced immigration will shrink the labor force by 15 million jobs by 2035

•National Foundation for American Policy: Trump administration immigration policies would lead to a potential labor loss to the U.S. economy of approximately 19 million worker years by 2028 and 102 million worker years by 2035

2. Recent U.S. evidence from enforcement

Research on the 2025 ICE enforcement surge is used as a natural experiment for a sudden stop:

•Across the cities with the sharpest rise in ICE arrests, employment fell 0.73% below what they would have seen absent the surge, and 1.48% in the 51 cities observed at least six months out

•Across 86 surge cities, ICE made roughly 52,000 excess arrests, yet each excess arrest is associated with 13 jobs lost overall

•Brookings/InC estimate: Of the 668,000 jobs lost, an estimated 51,000-297,000 would have been held by American-born workers

•The Department of Labor itself said in Oct. 2 Federal Register filing: "The near total cessation of the inflow of illegal aliens combined with the lack of an available legal workforce... results in significant disruptions to production costs and (threatens) the stability of domestic food production and prices for U.S consumers."

Mechanisms identified: firms facing sudden labor shortages scale back operations, and local demand weakens when immigrant households reduce spending out of fear - a "chilling effect".

This supports the "lose-lose" hypothesis: Reduced immigration means higher labor costs. This implies reduced output, and thus reduced demand for native labor, even if businesses partially substitute native for immigrant labor. Reduced immigration can therefore be "lose-lose," hurting native workers and businesses.

3. Which sectors most affected?

Immigrant workers fill chronic shortages in low‑wage and "essential" jobs, especially in agriculture, construction, food services, and caregiving

Brookings found the deepest direct hits fell on construction and on accommodation and food services, but industries with very few immigrant workers—such as arts and entertainment—also contracted sharply.

Other analyses note that without immigrants, labor shortages in healthcare, agriculture, technology, and construction would reach crisis levels.

Synthesis by the National Academies concludes immigration overall has only very small effects on wages and employment of native-born workers, and immigrants and U.S.-born workers usually do not compete for the same jobs, but rather complement each other. Sectoral evidence aligns with that complementarity.

4. Nuance and counter-arguments

Stopping immigration does not automatically translate 1-to-1 into measured "shortages" or wage gains for natives:

•Historical case: 1920s U.S. quotas - in areas with more missing immigrants, the border closure did not increase the wages of native workers. Findings suggest immigration restrictions led to substitution toward other sources of labor (e.g., internal migrants) and substitutable capital.

•Economics trade-off: Some economists expect negative net migration to have little impact on prices and inflation because businesses will experience reductions in both labor supply and demand for their goods and services. Fewer workers means fewer consumers.

•Short-run labor market dynamics are complex: One study found immigration-induced supply shocks are typically followed by a short-run period of slackness in the local labor market, as measured by advertised job openings, but the labor market tends to recover after a few years. The reverse - removing supply - does not automatically create jobs for natives.

•Methodological caution: Observing that labor-market tightness persists after implementation does not show that the policy caused it, because wages, economic conditions, and other reforms move simultaneously. Until such evidence is available, assertions that stricter controls will aggravate labor shortages are best treated as hypotheses. The 2025 Brookings studies are presented as the first causal evidence to test that hypothesis.

Other adjustments can mitigate shortages over longer horizons: higher wages to attract native workers, internal migration, increased labor force participation among women/older workers, automation, AI diagnostics and telehealth may offset shortages long term.

Bottom line

For the United States, Canada, Australia, and much of Europe and Japan - where native-born workforce growth is flat and immigrants are disproportionately prime-age - a complete stop to immigration would very likely:

1.Reduce total labor supply and GDP,

2.Worsen hiring difficulties in immigrant-intensive sectors (farm, construction, hospitality, healthcare and caregiving), and

3.Over 5-10 years lead to an absolute decline in workforce size, not just a tighter market.

Whether that is described as a "shortage" depends on demand: if the economy also slows because there are fewer consumers and businesses scale back, measured unemployment may not fall. In that case the effect looks like a smaller, less productive economy with fewer jobs for both immigrants and natives - as seen in the estimated 668,000 jobs lost in surge cities - rather than a classic shortage where wages sharply rise.

If you have a specific country in mind, sector, or time-horizon (e.g., 1 year vs. 10 years), the answer can be more precise.

Citations (2)

1inc.comNews and mediaquality 0.88
Trump’s Immigration Crackdown Has Cost the U.S. Economy 668,000 Jobs, Studies Show
Backs: “The Federal Reserve Bank of San Francisco found that without immigration, the U.S. working-age population would have started shrinking in 2012, not 2025. Indeed Hiring Lab: "The United States is aging, and immigrants, on average, are more likely to be of prime working age than native-born Americans" and "Without it,…”
evidence, article, points to yes. Claim: Without immigration the U.S. working-age population would have started shrinking earlier; immigrants are more likely to be prime working age, so losing them means a shrinking labor market.
2uni.luAcademic
The Effect of Immigration Restrictions on the Economy: Lessons from the 1920s Border Closure
Backs: “quotas - in areas with more missing immigrants, the border closure did not increase the wages of native workers. Findings suggest immigration restrictions led to substitution toward other sources of labor (e.g., internal migrants) and substitutable capital.”
evidence, article, neutral. Claim: In the 1920s border closure, areas with more missing immigrants saw no wage increase for native workers; restrictions led to substitution toward internal migrants and capital.