Mass deportations would harm the US economy

Former president Donald Trump has promised to carry out the “largest deportation program in American history,” a step targeting unauthorized immigrants endorsed by the Republican Party’s 2024 platform. This policy is intended to increase employment of native-born workers, boosting economic growth. But new research by scholars at the Peterson Institute for International Economics (PIIE) finds that mass deportations would lower US GDP and reduce employment through 2040, compared with what would happen if the policy were not implemented.  

In a new PIIE Working Paper, Warwick McKibbin, Megan Hogan, and Marcus Noland use econometric modeling to generate a baseline forecast for different variables like GDP, employment, and inflation in 24 countries and regions. They use the model to project the effects of three of Trump’s policy proposals—mass deportations, tariffs, and weakening Federal Reserve independence—measured as deviations from each baseline. This blog focuses on the economic impact of mass deportations—separate from the worrying humanitarian and moral costs such actions would have.

Trump and his advisors envision using local law enforcement, the National Guard, and the United States Armed Forces to implement the deportation plan. They claim authority to do so by citing the Insurrection Act of 1807 and other, often esoteric, statutes and interpretations of presidential prerogatives. Read more about this plan and Trump’s other immigration policy proposals here.

McKibbin, Hogan, and Noland examine two scenarios: a low-end estimate based on President Dwight D. Eisenhower’s deportation of 1.3 million persons in 1956 under what was officially called “Operation Wetback” and a high-end count based on a Pew Research Center study that estimated approximately 8.3 million workers in the US were unauthorized in 2022.

Both scenarios cause lower US GDP and employment through 2040 than the baseline projection—in other words, compared with what would have happened without the deportations. The scenarios differ only by the degree of damage inflicted on people, households, firms, and the overall economy.

In the “low” scenario, if 1.3 million unauthorized workers are deported, by 2028, US GDP is 1.2 percent below the baseline. In the “high” scenario, GDP is 7.4 percent lower than baseline by 2028 (figure 1). On the assumption that the baseline GDP growth is approximately 1.9 percent per year, this projection implies that the level of US GDP in 2028 will be almost unchanged from that in 2024—meaning no economic growth over the second Trump administration from this policy alone.

The model finds that by 2028 in both scenarios, employment measured in hours worked is below the baseline—1.1 percent under the low scenario and nearly 7 percent in the extreme case (figure 2).
These findings are consistent with PIIE senior fellow Michael Clemens’s explanation of why deportation of unauthorized workers reduces employment for workers in the US.

The Trump campaign assumes that employers would simply replace the deported workers with native workers, but the historical record shows that employer behavior is far more complicated than that. Past experience with deportations demonstrates that employers do not find it easy to replace such workers. Instead, they respond by investing in less labor-intensive technologies to sustain their businesses, or they simply decide not to expand their operations. The net result is fewer people employed in key business sectors like services, agriculture, and manufacturing.

In addition, those unauthorized immigrants aren’t just workers—they’re consumers too. Deporting them means less demand for groceries, housing, services, and other household needs. This lower spending in turn reduces demand for workers in those sectors. That reduced demand for workers in all types of jobs outweighs the reduction of supply of unauthorized workers. Contrary to the Trump campaign’s assumption that deporting workers increases domestic employment, removing immigrants reduces jobs for other US workers.

Deportations would also drive inflation higher than the baseline through 2028 in both scenarios, but inflation would return to baseline by 2030. The distribution of price changes across US sectors varies, partly because the sectors are initially subject to different shocks to potential labor supply and partly because production linkages across the US and global economies differ in their exposure to international trade. Agriculture is projected to suffer the hardest, which is not surprising as up to 16 percent of that sector’s workforce could be removed, resulting in higher prices.

In addition to the moral issue of rounding up millions of people, and disrupting their families, workplaces, and livelihoods, Trump’s “America first” proposal for mass deportations would raise prices, cost jobs, and harm the US economy. Other policy proposals, like high tariffs and eroding Federal Reserve independence, are projected to deal an economic blow as well. Those scenarios, separately and combined with deportations, can be found in the Working Paper.