The Costs of Closing DACA Initial Enrollments.

• Author: Brannon, Ike
• Position: IMMIGRATION

In July 2020, the Supreme Court rejected the Trump administration's attempts to end Deferred Action for Childhood Arrivals (DACA). The program allows foreign-born U.S. residents who arrived illegally in the United States with their parents before 2012 to obtain legal status to attend school and gain legal employment, providing they have no criminal record and complete a high school education. It was established in 2012 by the Obama administration via executive order.

The Trump administration expressed its displeasure with the Supreme Court's ruling and indicated that it will continue to seek ways to constrain DACA. Less than a month later, Chad F. Wolf, the acting secretary for Homeland Security, announced that the United States would effectively preclude new enrollees from participating in the program. This enrollment freeze affects both the "Dreamers"--beneficiaries of the program--who had turned 15 since September 2017, when the administration first froze new DACA enrollments, as well as those who have yet to reach that initial enrollment age.

The administration's hostility to DACA is rooted in its belief that immigrants take jobs away from U.S. citizens and that limiting legal immigration will invariably boost citizens' employment and wages. As Donald Trump put it in a July 2015 rally in Phoenix: "They're taking our jobs. They're taking our manufacturing jobs. They're taking our money. They're killing us."

We believe that the Trump policy will be counterproductive for U.S. citizens. DACA applies only to people who came to the United States prior to 2012, and the new enrollees affected by Wolf's memorandum are predominantly young people who arrived before the age of 7. This cohort would be unlikely to voluntarily leave the country even if they were denied the ability to attend school or work legally, and the cost of deporting them would be prohibitive. Most of them would remain in the United States and work illegally, should they be denied the ability to obtain legal employment.

Thus, limiting DACA enrollment is unlikely to reduce the number of these foreign-born workers in the economy. Rather, the Trump policy will change their composition in a way that is likely to harm American workers at the margins of the labor market.

Economists commonly divide the U.S. labor force into two broad categories of workers: skilled and unskilled. DACA essentially reduces the population of unskilled workers by moving a cohort of these potential entrants--unskilled foreign-born U.S. residents who came to the U.S. illegally--into the ranks of skilled workers by increasing the returns to their finishing high school and allowing them to legally attend college.

Allowing new enrollees into DACA would not only reduce the number of foreign-born low-skilled workers--by dint of more of them becoming skilled workers--but it would also boost demand for low-skilled workers because skilled workers create jobs for unskilled workers in a variety of ways.

In a 2019 paper, we showed that the demise of DACA would reduce the educational attainment and income of those who directly benefit by being able to study or work under its auspices. (See "Would Suspending DACA Withstand a Benefit-Cost Analysis?" Winter 2018-2019.) That, in turn, would affect worker wages and government revenue; DACA's abolishment would cost the federal, state, and local governments hundreds of billions of dollars over the next decade. Here we use that same analysis to estimate the specific effect of closing DACA to new entrants.

Our estimate considers the effect of new DACA enrollments on the educational attainment, future employment, and future earning of two Dreamer populations: those who reached age 15 before Wolf's memorandum, and those yet to attain that initial enrollment age. We project that if new DACA enrollments remain frozen, over the 2021-2030 decade those immigrants would see their combined income decline by about $6.4 billion. Those losses would expand dramatically over time, to about $19.7 billion in lost income and productivity in the 2031-2040 decade.

The federal government would lose roughly $2.8 billion in tax revenue from this reduced income in the next decade. State and local governments would lose about $705 million in tax revenue over the same period. Those losses would swell to $7.4 billion and $2.0 billion in the following decade.

In other words, closing off DACA would be exceedingly expensive, especially when considering it is completely ineffectual in achieving...