mmigrants contribute a large portion of the growth in the U.S. population and labor force. However, immigration flows into the United States slowed significantly following immigration policy changes from 2017 to 2020 and the onset of the COVID-19 pandemic. Analysis of state-level data shows that this migration slowdown tightened local labor markets modestly, raising the ratio of job vacancies to unemployed workers 5.5 percentage points between 2017 and 2021. More recent data show immigration has rebounded strongly, helping to close the shortfall in foreign-born labor and ease tight labor markets.
Immigration has traditionally provided an important contribution to the U.S. labor force. The flow of immigrants into the United States began to slow in 2017 due to various government policies, then declined further due to border closures in 2020–21 associated with the COVID-19 pandemic. This decline in immigration has had a notable effect on the share of immigrants in the U.S. labor force. For instance, Peri and Zaiour (2022) estimate that the pandemic led to 2 million fewer foreign working-age people in 2021 relative to the pre-2019 trend. More recent data from November 2022 show a significant pickup in immigration flows, narrowing this shortfall and returning numbers to the pre-pandemic level.
This Economic Letter explores the impact of recent changes to immigration flows on the labor market. I assess the labor market using the vacancy-to-unemployment (V–U) ratio, which is a well-known measure of the degree of labor market tightness, with a higher V–U ratio indicating a tighter labor market (Barnichon and Shapiro 2022). While gradual inflows of immigrants into the United States have historically tended to loosen labor markets, the sharp drop in immigration between 2017 and 2021 helped fuel a strong tightening in labor market conditions.
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