Do illegal immigrants provide a net positive or net negative impact on the US economy?
Executive summary
Most recent economic assessments in the provided reporting find that unauthorized immigrants have a small net-positive effect on the U.S. economy overall, mainly by expanding labor supply, contributing taxes and GDP, and supporting industries that would otherwise face shortages; several models show deportation or sharp reductions in unauthorized immigration would lower GDP growth by roughly 0.75–1 percentage point in 2025 and raise budget deficits by hundreds of billions over a decade [1] [2]. However, scholars and policy groups disagree on distributional effects: some workers and local services face downward wage pressure or net fiscal costs in specific places, and advocates caution that large-scale removals would damage output and public revenues [3] [4] [2].
1. Immigrant labor expands output and fills gaps in key industries
Unauthorized immigrants supply millions of workers in labor-intensive sectors—construction, agriculture, hospitality and food processing—and estimates put as many as 8.3 million undocumented people working in the U.S., about 5.2% of the workforce, according to CMS reporting cited in the reporting [5]. Analyses from the Federal Reserve Bank of Dallas and Cornell link immigrant labor to post‑pandemic job growth and to avoiding skill and staffing shortages that would reduce output in affected sectors [5] [1].
2. Macro estimates: small positive net effect, big negative from mass deportation
Multiple macro studies in the sample conclude immigration’s aggregate effect on GDP and the fiscal bottom line is positive or only mildly negative, and that removing unauthorized immigrants would shrink the economy. The Dallas Fed calculates that recent declines in net unauthorized immigration reduced 2025 GDP growth by roughly 0.75–1 percentage point relative to a CBO benchmark [1]. Penn Wharton’s model projects that a mass-deportation program would reduce tax revenues by around $187.4 billion from 2025–2034 and raise primary deficits by hundreds of billions over a decade [2].
3. Fiscal impacts vary by level of government and time horizon
Think tanks and research centers disagree on the size and timing of fiscal effects. EPI and related work report a broad consensus that immigration reduces overall budget deficits over the long run and increases economic output [4] [6]. Other analyses emphasize upfront local costs—schools, emergency care and some services—that can create fiscal pressure for states and localities even when federal fiscal effects are small or positive [3] [7]. The Manhattan Institute’s framing stresses methodological choices that can produce less-favorable fiscal estimates for immigrants, particularly over a 10- to 30-year window [8].
4. Distributional winners and losers: wages, jobs and employers
Economists in the sources agree effects are uneven. At the national level unemployment has not risen because of immigration, and immigrants expand aggregate demand and output [6]. Yet some studies (and commentators like George Borjas cited in synthesis pieces) find modest negative wage effects for lower‑skilled native workers in local labor markets, while employers gain from lower labor costs and greater ability to use capital and land productively [3] [6]. The EPI summary cites research suggesting large-scale enforcement actions could displace native workers as well as immigrants—evidence that outcomes hinge on policy design and local labor-market substitutability [4].
5. Policy shocks matter more than the stock of people
Across the sources, the clearest negative economic scenarios are not the existence of unauthorized immigration but abrupt policy shocks: mass deportation, sudden removal of work authorization, or rapid declines in labor supply. Models show these shocks reduce GDP, raise deficits, and damage integrated supply chains; ScienceDirect and Penn Wharton papers highlight cross-border spillovers and economy‑wide losses when foreign‑born labor is removed [9] [2]. Econofact and Dallas Fed pieces likewise link tighter curbs and repatriation drives to weaker growth and slower labor‑force expansion [10] [1].
6. What the evidence leaves unresolved
Available sources do not mention a single, universally accepted dollar figure for the “net” impact that applies to every community; results depend on horizon, methodology and assumptions about labor substitution, tax treatment and eligibility for benefits [8] [6]. Sources differ on magnitudes and on whether short‑run local fiscal burdens outweigh long‑run federal gains; readers should treat summary judgments (small net-positive vs. modest negative for some natives) as contingent on model choices and on policy responses [4] [3].
7. Bottom line for policymakers and voters
Policy choices drive outcomes. The balance of the sources shows unauthorized immigrants broadly add economic value at the national level—through labor supply, taxes, and GDP—but produce local pressures and distributional tradeoffs that fuel political conflict [6] [5]. Conversely, mass removal or rapid restrictions would shrink GDP and reduce tax revenues by hundreds of billions over a decade, according to major modeling exercises [2] [1]. Those tradeoffs, not a single moral or arithmetic verdict, should guide debate.