The Trump administration has committed to deport millions of undocumented immigrants. However, such wide-reaching deportations are costly. Deportations carry significant direct costs. Wholescale deportations undermine the US labour market, put loan repayments at risk, and harm immigrants’ US citizen dependents. The administration should weigh these costs when designing an efficient immigration policy.
The United States government has sought to curb illegal immigration. The administration claims that this is to ensure citizens’ safety and security. Nevertheless, the government should find the most economically efficient solution. Mass deportations are not it.
Recent legislation has targetted undocumented immigrants. The House has passed legislation has addressed sanctuary cities1 and people who repeatedly enter the US illegally.2 The Department of Homeland Security (DHS) has issued memos,3 which potentially place most4 of the 11 million undocumented immigrants at risk of deportation. These cement the approach in President Trump’s executive orders5. The deportations are potentially wide-reaching.
These deportations can have economic consequences. These involve shocks to labour supply, lending, and to US citizen dependents. This is in addition to the significant cost of deportation itself. These costs should be considered when pursuing any deportation plan.
Undocumented immigrants are a useful source of labour in some sectors. Undocumented immigrants constituted around 8 million, or 5%, of the workforce in the United States according to the Pew Research Center.6 This has remained relatively stable7 since 2009. This labour spikes in several key states,8 such as Nevada, California, Texas, and Florida.
Figure 1: Unauthorised Immigrant Labour Force Participation, By State
This graph contains unauthorised immigrant labour participation by state in 2014. Data is from the Pew Research Center.9
Undocumented immigrants are unlikely to be “stealing” citizens’ jobs. Undocumented immigrants often work in less desirable jobs that citizens often shun, and will often do so at lower cost. This manifests in unauthorised labour concentrating in specific industries. US businesses might not be able to directly replace undocumented immigrants, and if they did, would face lower profits. This, in turn, undermines corporate growth and future job creation.
Figure 2: Unauthorised Immigrant Participation in Certain Industries
This figure contains the percent of the labour force comprised of unauthorised immigrants, by industry, in 2014. The data is from the Pew Research Center.10
Recent estimates highlight the significant cost to growth of mass deportations. Deporting all 11 million undocumented immigrants is estimated11 to reduce the US GDP by $1.6 trillion. This should be a major deterrent to wholescale deportations.
About the Author
Mark Humphery-Jenner is an Associate Professor of Finance at UNSW Business School. His research spans Corporate Finance, Venture Capital, and Law. He has published and forthcoming papers in finance journals including the Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Review of Finance, Journal of Financial Intermediation, and Journal of Corporate Finance.
1. No Sanctuary for Criminals Act 2017. Available from: https://judiciary.house.gov/wp-content/uploads/2017/06/GOODLA_028_xml.pdf
2. Kates Law 2017. Available from: https://judiciary.house.gov/wp-content/uploads/2017/06/GOODLA_029_xml.pdf
3. United States Department of Homeland Security. 2017. Memorandum “implementing the President’s Border Security and Immigration Enforcement Improvements Policies.” Available from: https://www.dhs.gov/sites/default/files/publications/17_0220_S1_Implementing-the-Presidents-Border-Security-Immigration-Enforcement-Improvement-Policies.pdf
4. Casselman, Ben and Bacon, Perry. FiveThirtyEight. 2017. “How Trump’s New Plan Affects The 11 Million Undocumented Immigrants In The U.S.” Available from: https://fivethirtyeight.com/features/how-trumps-new-plan-affects-the-11-million-undocumented-immigrants-in-the-u-s/
5. Executive Order: Enhancing Public Safety in the Interior of the United States. 2017. Available from: https://www.whitehouse.gov/the-press-office/2017/01/25/presidential-executive-order-enhancing-public-safety-interior-united
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7. Passel, Jeffrey S and Cohn, D’Vera. 2016. “Size of U.S. Unauthorized Immigrant Workforce Stable After the Great Recession”. Available from: http://www.pewhispanic.org/2016/11/03/size-of-u-s-unauthorized-immigrant-workforce-stable-after-the-great-recession/
8. Pew Research Center. 2016. “U.S. unauthorized immigration population estimates”. Available from: http://www.pewhispanic.org/interactives/unauthorized-immigrants/
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10. Passel, Jeffrey S. and D’Vera Cohn. 2016. “Size of U.S. Unauthorized Immigrant Workforce Stable After the Great Recession.” Pew Research Center. Page 27.
11. American Action Forum. 2015. “The true cost of Trump’s immigration plan”. Available from: https://www.americanactionforum.org/oped/true-cost-trumps-immigration-plan/
12. Huseman, Jessica. 2014. National Mortgage News.“Setting the Record Straight on Mortgages for Undocumented Immigrants”. Available from: https://www.nationalmortgagenews.com/news/setting-the-record-straight-on-mortgages-for-undocumented-immigrants
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15. Passel, Jeffrey S and Cohn, D’Vera and Krogstad, Jens Manuel and Gonzalez-Barrera, Ana. 2014. Pew Research Center. “As Growth Stalls, Unauthorized Immigrant Population Becomes More Settled”. Available from: http://www.pewhispanic.org/2014/09/03/as-growth-stalls-unauthorized-immigrant-population-becomes-more-settled/#parents-of-u-s-born-children
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19. Beekman, Daniel. 2017. The Seattle Times. “Seattle wants $1M legal-defense fund for immigrants facing deportation”. Available from: http://www.seattletimes.com/seattle-news/politics/seattle-wants-1m-legal-defense-fund-for-immigrants-facing-deportation/
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