If Trump keeps his immigration promises, it will harm the U.S. economy

Dwyer Gunn writes: 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. [Continue reading…]

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