What Are the Economic Costs of Deportation?

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A new paper quantifies how deportation could hurt the economy.

By Dwyer Gunn

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A migrant farm worker harvests zucchini in Wellington, Colorado. (Photo: John Moore/Getty Images)

During his presidential campaign, Donald Trump famously promised to deport all of America’s approximately 11 million undocumented immigrants. While Trump has since dialed back his rhetoric, the president-elect promised in a recent interview to immediately deport the two to three million immigrants with criminal records before he would “make a determination” about everyone else. Trump has also, of course, promised to dramatically improve the American economy. But can that latter promise can be made by still keeping the first?

Probably not, according to a new working paper from the National Bureau of Economic Research, which serves as a reminder that those two oaths might be at odds with each other. In the research, economists Ryan Edwards and Francesc Ortega break down the economic contributions of unauthorized workers across different industries, while also exploring how mass deportations would affect those industries and looking at the effects of legalization. Undocumented immigrants constitute 4.9 percent of the American workforce. Some industries rely more heavily on these workers. In agriculture, for example, illegal immigrants represent 18 percent of the workforce. In construction, they constitute 13 percent; 10 percent in leisure and hospitality.

If all those workers were to disappear, gross domestic product (GDP) would go down by about 3 percent (that’s $5 trillion) over a 10-year period. “Once capital has adjusted, value-added in Agriculture, Construction and Leisure and hospitality would fall by 8–9%,” Edwards and Ortega write. “However, the largest losses in dollars would take place in Manufacturing, Wholesale and retail trade, Finance and Leisure and hospitality.”

And as for the opposite counterfactual, the one in which the country’s undocumented workforce was suddenly legalized? The authors find that legalization would increase private-sector GDP by about 0.5 percent, with larger gains (anywhere from 1.1 percent to 1.9 percent) in leisure and hospitality, construction, and agriculture.

Edwards and Ortega’s conclusions are consistent with past research, which overwhelmingly concludes that immigration is good for the economy at large, and that legalizing undocumented workers is beneficial to both the economy and native workers.

Of course, it’s likely immigration has also harmed some American employees, in particular low-skilled workers in direct competition with immigrants. While this has emerged as a bit of a hot-button issue in the economics field recently, the best research on the topic suggests that, at least in the short run, an influx of immigrants does reduce the wages of low-skilled (defined as those without a high school degree) native workers. Low-skill black men are particularly vulnerable to these effects. In other words, immigration is a lot like free trade: It’s good for most people, but not every single person.

There are approximately 11 million unauthorized workers in the United States today, eight million of whom are in the U.S. labor force, making meaningful contributions to the country’s economy. This latest research is a timely reminder that mass deportation, in addition to being an expensive proposition, could be harmful to the economy.

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