What Role Can Immigration Play in Addressing Current and Future Labor Shortages?
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Highlights
Immigration can help address labor shortages across skill levels, but must be paired with training investments, flexible pathways, and cross-portfolio talent strategies.
- Immigrants fill jobs across the skills spectrum in advanced economies, yet immigration alone is not a silver bullet and can delay needed investments in wages, training, and working conditions.
- Governments should update shortage occupation lists using real-time labor market data, introduce flexible work permits, and design labor market tests that reflect actual hiring practices.
- Non-employer-sponsored options such as talent and job-seeker visas can attract adaptable workers, including those with soft skills that are harder to automate and more easily transferred across sectors.
- A cross-portfolio talent strategy that links immigration, training, credential recognition, and labor policy is needed to effectively address both current and emerging shortages.
Labor shortages are a pressing concern for policymakers and employers alike in many countries around the world. As pandemic-era economic disruptions have collided with longer-running workforce trends, these shortages have become more acute but also hard to predict.
Immigration can play an important role in addressing labor shortages—and in some economies and sectors, already does. But there is a robust debate about the extent to which countries should rely on admitting immigrants to address these shortages, and how this should be balanced against other, more far-reaching policy interventions in education and training, labor, and social policy that would boost the labor market participation of resident native- and foreign-born workers.
This policy brief examines how immigration can help address labor shortages, the trade-offs that governments must navigate, and current and potential approaches to factoring labor shortages into economic immigration policies. The brief is part of a series of policy analyses and blueprints being generated under MPI’s Global Skills and Talent Initiative, which is exploring the role that immigration can play in addressing workforce needs and skills gaps in rapidly evolving labor markets.
Table of Contents
1 Introduction
2 Immigration’s Role in Responding to Labor Market Needs
A. What Constitutes a Genuine Shortage?
B. Will the Shortages of Today Exist in the Future?
C. What Pros and Cons Should Policymakers Consider When Using Immigration to Address Shortages?
3 Strategies for Factoring Shortages into Economic Immigration Policies
A. Create Flexible Immigration Pathways That Can Attract “Talent” While Ensuring New Arrivals Are Set up for Success
B. Update Shortage Lists for Dynamic Labor Markets
C. Look for Immigrants Who Can Adapt to Changing Labor Markets
D. Refine Labor Market Testing
E. Consider Occupation or Sector Work Permits
F. Develop a Cross-Portfolio Talent Strategy
4 Conclusion
About the Global Skills and Talent Initiative
Anchored in the premise that immigration policy must be part of a broader skills and talent strategy, the Initiative has a particular focus on employment-based immigration and the supports that can help immigrants apply their full range of educational and professional skills.
About the Global Program
The Global Program bridges policy advice, research, and candid dialogue to design effective migration policies, drawing on global evidence and anticipating the forces reshaping how people move.
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