The Thorny Economics of Illegal Immigration

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Few issues in the presidential campaign are more explosive than whether and how much to crack down on illegal immigration, which some Republican candidates in particular blame for America’s economic woes. Arizona is a test case of what happens to an economy when such migrants leave, and it illustrates the economic tensions fueling the immigration debate.

Economists of opposing political views agree the state’s economy took a hit when large numbers of illegal immigrants left for Mexico and other border states, following a broad crackdown. But they also say the reduced competition for low-skilled jobs was a boon for some native-born construction and agricultural workers who got jobs or raises, and that the departures also saved the state money on education and health care. Whether those gains are worth the economic pain is the crux of the debate.

Gordon Hanson, a University of California at San Diego economist who has studied the issue for the nonpartisan Council on Foreign Relations, has detailed how large-scale immigration undermines wages for low-skilled workers. In Arizona’s case, he thinks the state is paying an economic price for its decision. “As the U.S. economy continues to recover, the Arizona economy will be weighed down by slower growth and by less export production in traditional industries” such as agriculture where illegal immigrants play a big role, he says.

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In 2004, the Federation for American Immigration Reform, a Washington-based group that seeks to reduce immigration, calculated that undocumented workers cost Arizona taxpayers more than $1 billion a year for education, medical care and incarceration, after subtracting the estimated taxes they pay.

Four years later, Judith Gans, then manager of the immigration-policy program at the University of Arizona’s Udall Center for Studies in Public Policy, examined the issue for all immigrants, not just illegal ones. She concluded that immigrants accounted for nearly $1 billion more in annual tax revenue than they cost the state.

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http://www.wsj.com/articles/the-thorny-economics-of-illegal-immigration-1454984443