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Exploring the effects of illegal immigration on the US economy

Authors: Tricia Goh & Dhruv Jayaraman

Research Head: Sasthaa Gingee Babu (Uday)


This paper aims to identify and analyse the effects of illegal immigration on the United States economy, by first decontextualising and defining the statistics and what illegal immigration actually connotes. It then discusses the advantages and drawbacks of undocumented immigration, before looking at DACA (Deferred Action for Childhood Arrivals), before concluding with the main debate in mind.


The United States of America (USA) has long been known as a melting pot – a mix of different cultures and ethnicities that come together to build one America. The core of this melting pot is immigration, which is the process through which individuals become permanent residents or citizens of another country (Parry, 2021) With a record 44.8 million immigrants living in the U.S. in 2018, making up 13.7% of the nation’s population (Budiman et. Al, 2020), it is definitely no mystery as to why the term “melting pot” has continued to be used to describe the US.

In the USA, permanent residency is the prelude to being a naturalised citizen. To attain permanent residency, immigrants must apply for a green card, which is an informal term for lawful permanent resident (LPR) status. One option is to either be sponsored by an employer, or family that already are US citizens. Following this is a lengthy process which includes medical examinations and interviews.

Another option to gain Permanent Residency is via the Diversity Visa Lottery, which grants a limited number of immigrant visas yearly to foreign citizens from countries with a low immigration rate to the US.

Successful applicants are awarded with their Green Card, which grants new Permanent Residents with official immigrant status, entitlement to certain rights and responsibilities. There are roughly 1 million green cards that have been issued annually by the US in the past 20 years, ushering in a new wave of immigrants into the country.

Figure 1a - Annual Number of Legal Permanent Residents (MPI,2018)

While there are legal routes for entering the United States, such as the Green Card system mentioned above, there are also unauthorised methods through which millions of individuals set foot in the USA. There are approximately 10.4 million undocumented immigrants in the US, which represents about 3% of the total U.S. population.

While ex-President Donald Trump may have caused waves by proposing “building a wall in Mexico” to curb illegal immigration, illegal immigration is now largely caused not by border crossing, but rather, temporary visa overstays. Studies conducted by The Center for Migration Studies of New York in 2016 found that visa overstays significantly exceeded illegal border crossings since 2009.

This poses a question: What is the impact of these undocumented immigrants on the U.S. economy?

Drawbacks Of Illegal Immigration

The impacts of illegal immigration may be negligible, due to strict enforcement of border control by the Trump administration, and because of this, it may be increasingly difficult to accurately determine the exact intended effect of what illegal immigration does in a bad way, with regards to influences on American jobs and citizens.

The first main disadvantage is that menial, low-impact jobs that would normally be reserved for the youth, elderly and disadvantaged American citizens continue to be taken up by illegal immigration, and this harms long-term prospects and productivity of this population, denying their access to better long-term training and resources (Alexander et al, 2017).

Furthermore, undocumented immigrants are exempt from tax payments, and this fall in revenue can continue to harm the government, as government programs to benefit those in need may be discontinued due to a loss of funding, and ‘more mouths to feed’ to simplify (Alexander et al, 2017).

Similarly, educational and medical costs continue to rise, because the burden for these necessities are set on the taxpayer, and this may cause pressure to be built up in a system that may not be equipped to handle any more, owing to rising debt and heavy inflation (Hanson, 2020).

Finally, despite this being a trivial point, bilingualism could lead to a loss in culture, which might be considered important to Americans who value their individuality highly, and this relative dispersion due to undocumented immigrants, typically from Mexico, may bring ill will and indirect harm to Americans who refuse to be secular.

Benefits of Illegal Immigration

However, there is another school of thought that claims that illegal immigration is simply a symptom of a growing democracy, because it represents an opportunity for cultural diversity and secular enrichment (Alexander et al, 2017). To elaborate, illegal immigrants choose America for the well-known ‘American Dream’, and there remain plenty of stories of success for those who managed to succeed in a land of such opportunity.

In addition, the illegality of such individuals’ benefits companies, who stand to gain from cheaper labour, fewer job benefits to give out, and the lack of taxation that has to be filed for the undocumented. This could help boost growth and allow companies to grow bigger and bigger, ensuring a far steadier contribution to gross domestic product (Hanson, 2020).

Moreover, a steady stream of illegal immigrants getting paid salaries that are sent as form of transfer payments to host countries acts as a form of international aid, and this could be construed as the United States providing assistance to emerging markets and improving their standard of living through a regular cash influx (PPI Wharton, 2016).


Solving the problem of illegal immigration has been one of the focal points of American politics. Republicans, often direct opponents of the presence of undocumented immigrants in the U.S. contend for stronger policies that prevent border crossing and visa overstays.

Analysis of tweets made by Republican lawmakers from January 2016 to September 2018 found an average of 17 tweets being made about immigration in this time period. (Foo & Lange, 2018) Many were staunchly anti-immigration and called for tough enforcement of both borders and interior to keep illegal immigration out.

Figure 1b - Immigration related tweets by US lawmakers, 2016-2018 (Reuters,2019)

On the other hand, Democrats hold an alternate view when approaching the issue of illegal immigration. They contend that immigration policy can be firm, fair and in the best interests of both citizens and immigrants.

Instead of vilifying undocumented immigrants and opting for deportation, Democrats encourage providing an alternative pathway to citizenship, or to let these undocumented immigrants legally stay and work in the U.S.

One such immigration policy introduced by ex-President Barack Obama of the Democrats is Deferred Action for Childhood Arrivals (DACA) which allows individuals which were brought to the country illegally as children to receive a renewable two-year period of deferred action from deportation and become eligible for a work permit in the U.S.

However, DACA has currently hit a standstill after the Trump Administration rolled back the DACA programme, preventing new applications for DACA.

Other policies proposed by Democrats include the Development, Relief, and Education for Alien Minors (DREAM) Act. Built upon DACA, the DREAM act aims to provide current, former, and future undocumented high-school graduates and GED recipients a pathway to U.S. citizenship through college, work, or the armed services. (American Immigration Council, 2021)

With U.S. lawmakers holding opposing stances on immigration policy, the future of policies such as DACA and DREAM act remains uncertain. The flip-flopping of approvals and takebacks leaves hundreds and thousands of undocumented immigrants wondering if they will be ripped away from their families, communities and jobs.


In general, the debate is clear. Can quantify the drawbacks that illegal immigration brings to the US and justify the subsequent harm? Or does the United States benefit from this amalgamation of culture and the benefits from cheaper labour? In the end, it boils down to how much most Americans value their jobs over cultural enrichment and development, or vice versa. The administration in charge and their political leanings also play a role, so it is expected that the stance on this controversial issue will continue to fluctuate for years without any real solution. That being said, this raises an interesting point on collective unity against personal gain.


1. Alexander, Rose, et al. “The Impact of Illegal Immigration.”, 2017,

2. Budiman, A., Tamir, C., Mora, L., & Noe-Bustamante, L. (2021, March 11). Immigrants in America: Trend data and demographics, 1960-2018. Pew Research Center's Hispanic Trends Project.

3. Parry, S. (2021, August 17). immigration. Encyclopedia Britannica.

4. Hanson, Gordon. “Illegal Immigration's Effects on the U.S. Economy and Policy.”, 1 July 2020,

5. PPI, Wharton. “The Effects of Immigration on the United States' Economy.” Penn Wharton Budget Model, Penn Wharton Budget Model, 19 Dec. 2018,

6. Tanfani, J., Lange, J., & Stein, L. (2018, October 26). How Republicans are using immigration to scare voters to the polls. Reuters.

7. The DREAM act: An overview. American Immigration Council. (2021, September 15).

8. Warren, R. (2019). US undocumented population continued to fall from 2016 to 2017, and Visa overstays significantly exceeded illegal crossings for the seventh consecutive year. Center for Migration Studies.

9. WikiKnow, Wiki. “Economic Impact of Illegal Immigrants in the United States.” Wikipedia, Wikimedia Foundation, 30 Aug. 2021,,benefit%20consumers%20by%20reducing%20the

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