The Federal Reserve Bank of Dallas has released a working paper examining the impact of the record surge in illegal immigration during the Biden administration on local economies and labor markets.
The study found that the influx of illegal immigrants boosted local employment with little measurable effect on wages, but came with a trade-off of increasing housing demand enough to drive up home prices and rents.
Researchers discovered that the 1% increase in unauthorized workers relative to a local area's workforce corresponded with roughly a 1% increase in overall employment, with no evidence that the immigration surge lowered average wages.
However, the 1% increase in illegal immigrant worker flow raised local home prices by about 2.2% and rents by roughly 1.4%, while finding little evidence that new housing construction expanded enough to absorb the increased demand.
The study found that the housing demand shock, amplified by constrained housing supply in many areas, led to price pressures, which left American workers struggling to keep up with the rising costs.
The economists estimate that illegal immigrant worker flows accounted for roughly 30% of employment growth in the average local labor market between March 2021 and March 2024, and explained about 30% of home-price growth and roughly 20% of rent growth in the average metropolitan area over the same period.
The researchers also found that areas with larger increases in unauthorized immigrant workers experienced declines in government transfer payments, suggesting stronger employment and lower use of safety-net programs among working-age immigrants.
The study describes the years between 2021 and 2024 as an "unprecedented boom" in illegal immigration, with net unauthorized immigration adding roughly 7 million people to the U.S. population during that period before slowing sharply beginning in mid-2024.
The findings arrive as immigration remains a defining political issue, with Republicans arguing that former President Joe Biden's border policies strained housing and public resources, while Democrats have pointed to immigration as helping ease labor shortages and support economic growth.
The study is a preliminary draft circulated for professional comment and its findings do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.
