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The recent decline in immigration

New insights from the Research Division of the St. Louis Fed

The FRED Blog has discussed long trends and unexpected changes in the labor market in relation to the COVID-19 pandemic. Today, we focus on a foreseeable change in labor market conditions: the reduction in the size of the labor force due to locked-down border crossings and constrained immigration.

The FRED graph above shows data from the US Bureau of Labor Statistics about the number of foreign-born employed persons. The data are available since January 2007, and we have added a customized dashed line (in red) to indicate the trend in those figures between 2009 and the time of this writing. After the Great Recession, the steady growth in the number of employed persons born outside of the US was dramatically interrupted by the COVID-19 pandemic. It took the better part of three years for that segment of the labor force to bounce back to its pre-pandemic trend of growth. Did the missing workers from immigration restrictions result in long-lasting tight labor market conditions?

Recent research from Hannah Rubinton and Cassie Marks at the St Louis Fed finds some evidence that the immigration restrictions are unlikely to be the underlying cause of continuing labor market tightness. That can be explained by the fact that the number of missing workers from constrained immigration is  relatively small compared with the size of the overall employed population. A similar conclusion is reached when examining the relationship between labor market tightness and missing workers across industries and states. Only in the case of the food services industry did immigration restrictions noticeably increase labor market tightness.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph wase created: Search FRED for and select “Employment Level – Foreign Born.” From the “Edit Graph” panel, use the “Add Line” tab to “Create a user-defined line.” Adjust the “Value start” to “20000.” Last, use the “Format” tab to change the style for “Line 2: User-defined Line” to “Dashed.”

Suggested by Diego Mendez-Carbajo.

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