This paper studies the aggregate and plant-level effects of a persistent reduction in the local supply of labor. It exploits an integration of local labor markets between France and Switzerland in 1998 which induced high- and mid-skill French workers to seek work in Switzerland. In the aggregate, the supply shock increases the wages of high-skill workers, and there is some evidence of a drop in low-skill wages. The former wage effect persists because labor supply is diverted from France to Switzerland. A decomposition suggests that incumbent establishments generally reduce their scale of operations and do not become substantially more low-skill intensive. The plant-level analysis confirms this scale reduction and shows that incumbent employers use fewer workers of all types, and in particular low-skill workers. These effects are concentrated among plants that rely on specialized knowledge and is driven by reduced hiring as opposed to increased separations. Further evidence suggests that these firms also hire more experienced workers consistent with a reduction in the span of control of the remaining higher-skilled employees.