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GTAP Resource #2800

"Economic Analysis of U.S. Immigration Reforms"
by Aguiar, Angel and Terrie Walmsley

In January 2004, President George Bush proposed the creation of a temporary worker program. This new temporary worker program would be open to undocumented workers in the U.S. as well as to prospective migrants currently residing abroad. This program would temporarily allow immigrants to fill jobs that, according to employers, would otherwise go unfilled. However, the U.S. Congress vetoed the presidential proposal and requested a stricter enforcement of immigration law and the consequent deportation of undocumented immigrants. This study analyzes the economic effects of these immigration reforms using a general equilibrium model of migration.

The global migration model (GMig2) developed by Walmsley et al. (2005) is modified to include a third labor category to reflect estimates of undocumented workers in the United States. We consider two policy scenarios. First we model the deportation of undocumented workers in the U.S. economy. Second, we implement the legalization of undocumented workers by allowing undocumented workers to move from illegal to legal status.

The full deportation of undocumented workers causes a loss of a 1.14 percent of U.S. GDP. Similarly, the legalization of unskilled Mexican workers without new migrants, results in a loss of U.S. GDP by 0.35 percent. The loss of undocumented unskilled workers raises the cost of production, as firms face more expensive labor, which offsets the gains from getting more legal unskilled workers. In contrast, when unskilled Mexican workers are legalized and new unskilled migrants are allowed to enter, the result is an increase in GDP of 0.24 percent.

This study contributes to the understanding of the relationship between migration and the U.S. economy and consequently, aid economists and policy makers in evaluating the impact of alternative migration policies.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Aguiar, A. (4/16/2008)
Updated: Aguiar, A. (6/11/2008)
Visits: 3,119
- Labor market issues
- North America

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