What do peer-reviewed studies say about the fiscal impact of undocumented immigrants in the U.S. economy?
Executive summary
Peer‑reviewed and expert reports generally find that undocumented immigrants have a small net positive fiscal effect at the federal level over long horizons, while impacts vary widely by state and on short horizons—and mass deportation scenarios would sharply reduce revenues and GDP (examples: broad consensus of small positive long‑run fiscal impact [1]; mass deportation would cut revenues by ~$300 billion over 2025–34 and raise primary deficits by ~$862–$987 billion in Penn Wharton modelling [2]). Available sources do not mention a single, settled peer‑reviewed numeric estimate that applies uniformly across all U.S. jurisdictions.
1. What the peer‑reviewed literature and expert reviews say
Academic and committee reviews emphasize nuance: many rigorous studies and national panels conclude immigrants overall are net fiscal contributors to the federal budget over long horizons, but effects depend on age, education, and legal status. The National Academies project summarizes the literature and notes consensus on complex, heterogeneous effects—fiscal impacts differ by time horizon, government level, and immigrant characteristics [3]. A general‑equilibrium academic model finds the fiscal effect can be small and depends on labor‑market responses and legal status [4].
2. Federal vs. state and local: the central split
Multiple sources stress that federal budgets tend to capture immigrants’ long‑run net contributions (taxes paid versus transfers received), whereas state and local governments face concentrated short‑run costs—chiefly education and health services—that can make local fiscal impacts negative in places with many low‑income immigrants [5] [6]. The Manhattan Institute papers likewise model per‑capita public‑goods spending and show different timelines and assumptions can change outcomes [7] [8].
3. Methodology drives conclusions — lifetime vs. budget‑window analyses
Studies diverge because they use different windows and assumptions. Lifetime analyses (which follow immigrants and their fiscal contributions over many decades) often show larger net positives; 10‑ or 30‑year budget‑window studies can find smaller benefits or short‑run costs, especially for lower‑educated entrants [8] [7]. Authors explicitly note that assumptions about fertility, mortality, labor supply, tax law, and use of public goods materially shift results [7] [8].
4. Taxes paid, services used, and undocumented status
Multiple analyses and data compilations document sizeable tax payments by undocumented households (examples: billions in federal, state and local taxes cited by advocacy and research groups), and also note that undocumented workers pay into Social Security/Medicare despite limited access to benefits [9] [10] [11]. Yet reporting also flags higher uninsured rates and concentrated use of certain local services, producing net local fiscal burdens in some jurisdictions [6] [5].
5. What modelling says about deportation scenarios
Non‑peer‑reviewed but peer‑market models and policy briefs converge that mass deportations would be costly: Wharton’s Penn‑Wharton Budget Model projects revenues would fall by $300.4 billion over 2025–2034 and primary deficits rise by roughly $862–$987 billion with dynamic effects [2]. The Baker Institute and Joint Economic Committee estimates find large GDP losses—Baker Institute: 2.6%–6.2% GDP decline over a decade for some scenarios; JEC and Peterson Institute work also project multi‑percent GDP and employment losses under large‑scale deportations [12] [13].
6. Where the evidence disagrees and why
Disagreement tracks assumptions and purpose. Think‑tank outputs vary by normative perspective and modelling choices: some conservative‑leaning updates (Manhattan Institute, AEI) emphasize higher per‑capita spending and greater fiscal costs under certain assumptions [7] [14], whereas progressive research centers (EPI, American Immigration Council, CMS) emphasize net fiscal benefits and the taxes undocumented immigrants pay [1] [9] [10]. The National Academies recommends using multiple methods because single studies cannot capture the full complexity [3].
7. Practical takeaway for policymakers and voters
Policy conclusions depend on goals and time horizons: legalization and labor‑market access raise tax revenue and shrink some fiscal gaps over time; mass deportation carries large modeled fiscal and macroeconomic costs [2] [11]. State and local budgets require targeted approaches because local impacts can be negative even when federal impacts are positive [5] [6].
Limitations and gaps: available sources do not present a single peer‑reviewed consensus number applicable to every state and period; many high‑impact policy estimates (e.g., mass‑deportation GDP and deficit effects) come from simulation models and policy institutes rather than one unified peer‑reviewed study [2] [12] [13]. Readers should treat numeric estimates as model‑dependent and examine the methods behind each report [8] [7].