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While i see the logic, i think you have simplified the economics too much. Now I'm no economist, but i think the first mistake you made is assuming that economic growth (which drives labor demand) is independent of population size. More people means more consumers, more businesses, and more economic activity, which increases demand for labor.
Also, in advanced economies, high wages aren't just about fewer workers, they're about high productivity, education, and technological development. If fewer workers alone led to wealth, countries with aging and shrinking populations (like Japan) would be thriving economically, but they aren’t.
Lastly, even if labour supply is tight, companies either automate jobs, outsource work, or relocate rather than just raising wages indefinitely. If migration is restricted too much, businesses would just move instead of paying higher wages.
I think if we really care about wages, the focus should be on stronger unions, better worker protections, and policies that ensure migrants don’t get exploited as cheap labor (avoid the Canada situation).