What does recent research (2020–2024) say about the economic impact of undocumented immigration in the United States?
Executive summary
Recent research from 2020–2024 converges on a nuanced conclusion: undocumented immigrants make measurable contributions to U.S. economic activity and tax revenues, while also producing localized wage pressures for some low‑skilled native workers and creating distributional fiscal effects that depend on time horizon and policy assumptions (CBO, ITEP, Dallas Fed, SF Fed) [1] [2] [3] [4]. Studies assessing large-scale deportation or abrupt drops in migration uniformly project negative macroeconomic and sectoral consequences—lost GDP, disrupted industries, and high removal costs—though exact magnitudes vary with modeling choices (Penn Wharton, ScienceDirect, Baker Institute) [5] [6] [7].
1. Fiscal net effects: modest long‑run gains but complex timing
Nonpartisan budget analyses find that recent increases in immigration raised federal revenues more than mandatory spending over a 2024–2034 baseline, lowering projected deficits by roughly $0.9 trillion in CBO estimates, though the agency stresses substantial uncertainty and sensitivity to assumptions [1]. Complementary state and local analyses show undocumented households also contribute billions in taxes and spending power, with ITEP and advocacy groups estimating large aggregate tax payments while noting methodological adjustments to capture undercounts [2] [8]. Opposing analyses that emphasize long‑term fiscal costs exist in the policy literature, but the CBO’s near‑term budget framing and ITEP’s tax accounting provide evidence that undocumented workers are net contributors to public revenue in many scenarios [1] [2].
2. Labor markets: easing tightness but mixed wage effects
Recent Fed and academic work links the post‑2021 immigration surge to easing labor market tightness in 2023–24, estimating millions of additional undocumented entrants and correlating higher inflows with lower vacancy‑to‑unemployment ratios in affected states (San Francisco Fed; Dallas Fed) [4] [3]. Microeconomic and macro studies consistently find that immigration raises aggregate employment and output but can impose small negative wage effects on lower‑skilled native workers while benefiting higher‑skilled workers through complementarities—results that depend on substitution elasticities and local labor market structure [9] [4].
3. Sectoral dependence and disruption risk
Agriculture, construction, and certain service industries rely disproportionately on undocumented labor; modeling and case studies warn that large removals would sharply disrupt production, raise input costs, and squeeze downstream industries (Baker Institute; ScienceDirect) [7] [6]. Computable general equilibrium and macro models projecting mass deportation show persistent declines in U.S. real GDP out to 2040 and sectoral shocks that would not be easily offset by native labor or capital reallocation [6].
4. The economic cost of enforcement and deportation
Analyses that price large‑scale removal policies put substantial fiscal and economic costs on the table: estimates of deportation cost per person and aggregate program costs run high, with combined studies producing per‑deportee cost figures used to show that mass deportation is expensive and growth‑reducing (Penn Wharton; American Immigration Council sources cited) [5]. Beyond direct costs, models project lost tax revenue, lower GDP, and supply‑chain disruptions that multiply fiscal impacts over time [5] [6].
5. Measurement challenges and changing flows
All recent work emphasizes measurement uncertainty: population estimates shifted materially through 2022–24, and net flows flipped in some projections beginning in 2024–25 as entries declined and removals rose—making near‑term impacts sensitive to updated data and policy changes (Center for Migration Studies, Dallas Fed, Brookings) [10] [3] [11]. Authors explicitly warn against overconfident point estimates and call for careful local analysis because national aggregates mask large county‑level variation in labor market and fiscal outcomes [3] [1].
6. Political framing, agendas, and alternative interpretations
Research is interpreted through competing policy lenses: advocacy organizations highlight tax and GDP contributions to argue against mass deportation, whereas some think‑tank and congressional testimonies stress fiscal burdens and housing pressure to justify restriction—both sides rely on overlapping data but differ in assumptions about long‑run assimilation, program eligibility, and discounting (American Immigration Council; Congressional testimony; Oversight materials) [8] [12] [13]. Awareness of these implicit agendas is critical when weighing estimates, since methodological choices (time horizon, elasticity, population base) materially change conclusions.
Conclusion
The preponderance of evidence from 2020–2024 indicates that undocumented immigration supports U.S. economic activity and federal revenues while producing localized labor market displacement risks for lower‑skilled natives; abrupt policy actions like mass deportations or sudden migration cuts are projected to shrink GDP, raise costs, and impose large fiscal and economic burdens, but precise magnitudes remain conditional on data updates and modeling choices [1] [4] [5] [6].