How Illegal Immigration Is Good for the Economy

Many people may be surprised to learn that unauthorized immigration benefits the US economy. In fact, Economist Gordon H. Hanson, has explained that stopping unauthorized immigration may cause a net drain on the US economy. Unauthorized immigration benefits the US economy by providing employers with low wage labor. Low wage labor keeps the costs of producing goods down which leads to lower costs for the consumer. This means that not only are Americans able to purchase goods for lower costs, but so are foreigners. As a result, US exports are higher due to more globally competitive prices. However, if employers didn’t hire unauthorized immigrants, then the cost of production would rise, prices would increase, and exports would decline.

An example of the problems that can arise when rates of unauthorized immigration decrease can be found in the state of Arizona. Many economists agree that Arizona’s economy took a hit after the state cracked down on unauthorized immigration. However, some argue that the benefits that come with reducing unauthorized immigration, such as lower government spending on health care and education for unauthorized immigrants and the employment of more US born labor, outweighs the economic costs that accrue from cracking down on unauthorized immigration. Contrary to popular belief, research shows that this is not true.

The US Department of Agriculture (USDA) conducted a study where researchers performed simulation analysis to determine what the effects would be on the economy if the unauthorized immigrant population decreased or if the unauthorized immigrant population increased. Results showed that an increase in the unauthorized immigrant population would lead to the increased employment of unauthorized immigrants at lower wages which would lead to increases in agricultural outputs and exports. However, a decrease in the immigrant population would lead to several problems in the US economy.

USDA research results show that along with a decrease in unauthorized immigrant labor there would be a labor shortage of farmworkers by 3.4 to 5.5 percent. Long run effects of decreased immigrant labor include an increase in wages for low paying positions and a decline in aggregate income. The reasons for a decrease in aggregate income include a relative decrease in production in the long run and the redistribution of employment from higher income positions to lower income positions. The long run relative decrease in production means that production would not only decrease in the agricultural industry, it would decrease throughout the entire US economy. This would result in the reduction of incomes for higher wage positions.

Overall, the USDA found that decreasing unauthorized immigration by a significant amount would badly affect the US economy. In fact, the benefits that come from decreasing unauthorized immigration would not outweigh the negative effects that decreasing unauthorized immigration would have on the US economy. So if lawmakers want to decrease unauthorized immigration, then they must first come up with a well thought out plan on how to handle the detriments associated with decreased levels unauthorized immigration.


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