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ImmigrationWhy mass deportations are costly and hurt the economy

By Mark Humphery-Jenner

Published 1 March 2017

President Donald Trump has pledged to deport several million undocumented immigrants and recently set a plan in motion targeting those with criminal records (of any kind). While the ethical issues with mass deportations have received lots of attention, the economics haven’t been explored as comprehensively. And the costs of mass deportations will likely be significant. Deportation-related economicfactors mean that the government must think carefully before aggressively pursuing undocumented immigrants. There are significant costs associated with deportations and the government should consider them carefully when weighing its policy objectives.

President Donald Trump has pledged to deport several million undocumented immigrants and recently set a plan in motion targeting those with criminal records (of any kind).

While the ethical issues with mass deportations have received lots of attention, the economics haven’t been explored as comprehensively. And the costs of mass deportations will likely be significant.

These include the impact on economic growth and the labor force, which have received some coverage, but there are several other factors that ought to be considered, such as the debts and dependents left behind by those deported and the costs of giving them the boot.

Undocumented immigrants and debt
To start with undocumented immigrants are able to amass debt in the U.S., and being deported makes it less likely they’ll honor it. This imposes risks on the financial system and on lenders in particular.

A person need not be a citizen or a permanent resident to obtain a mortgage, credit card, car loan or student loan – something covered even at Trump University, it seems.

To get a mortgage, for example, an illegal immigrant need only show a history of paying taxes, have a down payment and possibly have other documentation of income. Alterra Home Loans, for one, explicitly offers home loans to people with no social security card and no documents to prove legal status. Thus, loans are clearly available to undocumented immigrants. According to a 2009 Pew Hispanic Center survey, about 35 percent of “unauthorized immigrant households” own a home.

It is not clear how many mortgages have been given to undocumented immigrants. Of the 11 million estimated immigrants in the U.S. without papers, if we assume 1 million of them currently have a mortgage of US$50,000 (a third of the average of $172,806), this conservative estimate would put about $50 million at risk during a mass deportation.

Or another scenario could involve a person who enters legally under a multi-year visa, amasses debt including a mortgage, overstays that visa and then is deported as an illegal.

The credit costs of deporting undocumented immigrants could be high and avoidable. Is it really worth damaging the economy by deporting immigrants who make consistent payments as responsible borrowers?