Immigration of foreign-born individuals moving to the U.S. has sparked serious debates about the pros and cons of the movement. Of particular concern has been the large number of immigrants who bypassed the established process of entering the country. Estimates of the number of unauthorized immigrants are as high as 14 million for the years 2021-2024. Since 2024, the number of unauthorized immigrants has fallen.
Potential positive impacts of immigration are an increase in the labor force, a reduction in labor shortages, more spending in the economy and more taxes paid. Possible negative impacts are downward pressure on wage rates and increased costs for consumers, in particular for housing. These issues are most controversial for unauthorized immigrants.
As an economist, I prefer addressing disagreements with facts and analysis. Fortunately, a new study of the economic impacts of unauthorized immigration was recently released. In March, the Federal Reserve Bank of Dallas published a detailed study using data from 2021 to 2025 to estimate the impacts of unauthorized immigration in two key areas: the labor market and the housing market.
Before jumping into the results of the study, let me first explain what a Federal Reserve Branch Bank does. There are 12 Federal Reserve Branch Banks in the country, each with its own territory. North Carolina is part of the Richmond Federal Reserve Branch Bank. These banks do not set monetary policy applying to interest rates and the money supply. Those decisions are made by the central Federal Reserve Bank in Washington, D.C. Instead, the branch banks serve as regional offsets to the Federal Reserve Bank, which I will call the “Big Fed Bank.”
When the Big Fed Bank was created in the early 20th century, our country was greatly regionalized, with major differences and conflicts between the regions. Many businesses in the regions were worried the powerful Big Fed Bank would not consider regional interests, especially of smaller regions, when monetary policy was set. Hence, the 12 regional banks were created to make sure regional interests were communicated to the Big Fed Bank.
Like the Big Fed Bank, the regional banks engage in many tasks, including conducting studies important to their constituents. With the Dallas bank being close to the southern border, it makes sense that issues related to immigration would be important to its constituents.