President Donald Trump made immigration a central issue in his 2024 campaign, promising that a hardline crackdown would resolve major national challenges, from the economy and labor market to housing. His rallies drew large crowds with red signs demanding mass deportations.
However, economic research suggests that such policies may backfire, potentially reducing long-term prosperity for native-born Americans.
A new study from the libertarian think tank Cato Institute analyzed historical data from the 1920s, a period of intense U.S. immigration restrictions, to examine the long-term effects of quotas on economic mobility.
The findings indicate that restrictive immigration policies can negatively impact the wages and occupational outcomes of U.S.-born white men for generations.
Historical Insights from the 1920s
The Cato study focused on the U.S. immigration laws of 1921 and 1924, which implemented strict quotas following a period of mass migration from 1850 to 1920.
Researchers used county-level data based on preexisting immigrant populations and linked this information to historical census data from 1900, 1920, and 1940, along with the Census Tree project, which connects family records over time.
The study found that in counties most affected by immigration quotas, U.S.-born white men were significantly less likely to achieve higher-status jobs than their fathers.
A five-percentage-point increase in exposure to a quota corresponded to a 2.6% reduction in weekly wages. For Black men, effects were slightly positive but not statistically significant.
Modern Implications for the Labor Market
Contemporary research reinforces these historical findings. A National Bureau of Economic Research (NBER) study found that for every six immigrants removed from the workforce, one native-born worker lost their job. Labor shortages are becoming more pronounced in industries like construction.
The National Foundation for American Policy (NFAP) noted a drop in labor-force participation among U.S.-born workers aged 16 and older, falling from 61.4% in February 2025 to 61% in 2026.
Goldman Sachs reported an 80% decline in net immigration to the U.S., with arrivals falling from roughly 1 million per year in the 2010s to a projected 200,000 in 2026.
These trends suggest that Trump’s immigration policies could exacerbate workforce shortages and lower economic mobility, mirroring the negative outcomes observed in the 1920s.
Why Immigration Affects Native Worker Outcomes
Researchers propose several mechanisms to explain the historical data. Immigrants enable native-born workers to specialize in higher-skilled tasks, increasing productivity and earnings.
Removing immigrants from the labor force can reduce opportunities for specialization and overall wage growth.
In the 1920s, labor substitution—where immigrants replaced other workers—was concentrated in urban areas and did not fully account for the decline in wages.
The complementarities between immigrant and native workers appear to play a more significant role, with immigrants boosting productivity and creating opportunities for higher-quality employment for U.S.-born workers.
Economic Lessons for the 2020s
While the economy of the 1920s differs from today’s AI-driven labor market, the underlying principles of labor complementarities remain relevant.
Historical and modern data suggest that immigration restrictions can have unintended consequences, reducing economic mobility and workforce efficiency for native-born Americans.
If current trends continue, areas with aggressive enforcement and ICE operations could see long-term declines in productivity, labor participation, and economic growth, potentially undermining the “America First” promise of widespread prosperity.
Summary Table of Key Facts
| Aspect | Details |
|---|---|
| Policy Focus | Trump 2024 immigration crackdown |
| Historical Analysis | 1921 & 1924 U.S. immigration quotas |
| Key Finding | Restrictions reduced wages and job mobility for U.S.-born white men |
| Modern Labor Research | NBER: 1 native-born job lost per 6 immigrants removed |
| Workforce Effects | Shortages in industries like construction |
| Labor Participation | Drop from 61.4% (Feb 2025) to 61% (2026) for U.S.-born workers |
| Immigration Trends | Net immigration projected to decline from 1M/year to 200,000/year by 2026 |
| Economic Mechanism | Immigrants enable native workers to specialize and increase productivity |
Trump’s hardline immigration policies may have unintended economic consequences for native-born Americans. Historical evidence from the 1920s, combined with contemporary research, suggests that reducing immigration can lower wages, decrease job mobility, and exacerbate labor shortages.
While intended to boost prosperity and employment, immigration restrictions could, in fact, undermine long-term economic growth and workforce stability.
