Will stopping immigration cause labor shortages?

Stopping immigration and labor shortages is a complex, contested question — I'll gather recent evidence on how the two are linked.

Short answer: Yes, according to most recent U.S. economic research - especially if "stopping" means sharply reducing or ending net immigration for more than a short period - it would shrink the labor force and worsen or create labor shortages, though the effect is uneven across industries and geography. A minority view argues a complete economy-wide shortage would not occur.

1. Immigration is now the main driver of U.S. labor force growth

> With declining fertility and an aging population, net immigration has constituted the vast majority of population growth since the pandemic

Brookings models the next administration's policies under a "high" and "low" immigration scenario:

The Congressional Budget Office analysis summarized in recent reporting:

> Sharp reductions in net immigration and enforcement crackdowns shrink the overall labor force and slow economic and GDP growth

Barclays similarly warns:

> Slower immigration and population aging could make the labor-supply constraint more structural than cyclical
> with weaker immigration and demographic aging increasingly constraining the pool of available workers

2. Empirical link between immigration and job growth

The Federal Reserve Bank of San Francisco study of the 2021-2024 period found:

> An analysis of data over several years found a direct relationship between the number of unauthorized immigrants in the country and job growth
> areas of the country that recently experienced the largest slowdowns in unauthorized immigration also saw the largest slowdowns in employment growth

One reason is demographics:

> The number of native-born workers is shrinking

The authors project:

> if net migration fell from significantly positive in 2024 to -650,000 in 2025... the reduction in production of output by immigrants would subtract 0.2 percentage points off GDP growth next year
> we estimate that the reversal from positive net migration to negative net migration would reduce employment growth by almost 100,000 a month

And more broadly:

> A sudden plunge in immigration reduces the labor force available to fill jobs that businesses expect to fill, which Brookings models say will dampen employment, GDP, and consumer spending and push sustainable monthly job growth well below historical norms—perhaps to 20,000–50,000 or even negative territory in 2026

3. Where shortages would be most acute

Economists do not predict an equal shortage everywhere. Industries most vulnerable are those most dependent on migrant labor, including:

> agriculture, hospitality, manufacturing, and — the San Francisco Fed emphasized — construction

Other reporting notes:

> Many industries are struggling to replace immigrant workers who are leaving the workforce, most notably agriculture, construction, manufacturing, transportation, leisure and hospitality and personal services. This is limiting the ability of these industries to expand and raising their costs

Quantitative examples:

Research also notes the "chilling effect" - employment among remaining immigrants declines 4% on average after an Immigration and Customs Enforcement surge, and that for every six male undocumented workers lost, the labor market also loses one male U.S.-born worker.

4. International example: Japan

Japan is often cited as a country that industrialized without drawing on immigrant labor, relying instead on rural residents and women, but

> chronic labor shortages—especially in construction, shipbuilding, agriculture, healthcare, hospitality, and manufacturing—have caused the Japanese government to liberalize its immigration policy

Other consequences noted:

> Japan is an example of a country where the population has stopped growing due to an aging population, low birth rates, and limited immigration. These trends have led to significant demographic challenges, including labor shortages
> Japan may face a shortage of 11 million workers by 2040, even with almost no economic growth

5. Counter-argument: Not necessarily an economy-wide shortage

Not all analysts predict widespread shortages:

> Broadly speaking, economists say they don't anticipate widespread economic reverberations including labor shortages
> The truth is even with all the TPS termination and deportations, we are talking about fewer than a million people losing work authorization or being deported... This is out of a labor force of nearly 170 million people
> So any labor market impact of immigration is very limited and only concentrated in more affected industries

In the Brookings model, the near-term inflation impact is also expected to be modest, because while labor supply falls, aggregate demand also falls as immigrants consume less.

Other mitigating factors sometimes cited:

Bottom line

If you are evaluating a specific country, time horizon, or industry, the answer differs - tell me which, and I can break down the sector-level projections.