Contents

Contents..................................................................................... 1
Does illegal immigration have more of an economic impact than
legal immigration? ...................................................................... 2
Introduction .............................................................................. 2
Economic Impact of Illegal Immigration .................................. 3
Economic Impact of Legal Immigration ................................... 5
Comparative analysis (859) .................................................... 7
Socioeconomic Impacts .......................................................... 9
Policy implications ................................................................. 10
Conclusion ..............................................................................11
Appendices.............................. Error! Bookmark not defined.
Data ....................................................................................... 15
............................................................................................... 16
Does illegal immigration have more of an economic impact than legal immigration?

Introduction

The economic impact of immigration, both legal and illegal, is a topic of significant
debate and complexity, with implications for various aspects of the economy, includ-
ing job markets, tax revenues, and overall productivity. Global migration has effects
on both sending and receiving countries. In terms of global migration means the
sending country is the homeland of migrants before they relocate and therefore the
receiving country is where they move to, however since they can only accept a cer-
tain number of refugees and migrants, countries put in place different policies and
taxes which then affects the economy causing both positive and negative change. Il-
legal immigration is the arrival of people from one country to another without entering
via legal methods (Jahangir Moini, 2023), whereas legal is documented.

This can have a multitude of impacts and doesn't limit itself to purely positive or neg-
ative. The socio-economic effect needs to be considered not to mention the effect on
the immigrants’ mental well-being is also a deeply rooted issue. Impact on sending
countries is increased incomes, poverty reduction, and improved health and educa-
tion outcomes through remittances. Receiving countries can be impacted by many
direct and indirect effects on economic growth through taxes, not to mention the pos-
itive contributions to productivity. There are also impacts on the GDP and the labour
force. Studying the economic impact of immigration is critical for understanding the
far-reaching consequences for sending and receiving countries and is further essen-
tial for informed policymaking which has a big impact on immigration, especially ille-
gal immigration and how the challenges of policy decisions affect immigration in dif-
ferent ways. Understanding tax revenues and overall economic productivity can be
valuable not just for understanding immigration but also for other current economic
objectives not to mention the fact that it is crucial to differentiate between legal and
illegal immigration to receive targeted policy responses.

This topic is currently undergoing debate making it a relevant research question.

New laws are being passed by the House of Parliament in July of 2023 (Parliament,
July 2023) the UK parliament seeks to prevent and deter unlawful immigration, espe-
cially via unsafe routes. The importance of investigating economic impacts also
stems from having a deeper understanding of informed policymaking to understand
the current changes in economic systems due to immigration. The implications on
taxes, job creation, and wages all differ when comparing illegal and legal immigration
and thus have varying economic impacts. All of these have different impacts on legal
and illegal immigration which are vital for a different perspective on the different
types of immigration. Exploration of trends in skill level, earnings, and effects on la-
bour markets have an enormous impact on illegal immigration and the immigrants’
effects on the economy after fully immigrating to a new country. Illegal immigrants
can also impact entrepreneurship, human capital, productivity, and economic growth
perhaps even more than legal immigrants and citizens not to mention the positive ef-
fects on innovation, workforce education, and occupational specialisation that come
from illegal immigrants. The multifaceted impact on both sending and receiving coun-
tries is crucial for developing well-informed policies as is currently going on. How-
ever, it is still imperative to consider not only the economic background of this topic
but also the social, cultural, and political aspects of this complex question. This then
further poses the question, after considering all these factors, does illegal immigra-
tion have more of an economic impact than legal immigration? My hypothesis would
be that illegal immigration would have a greater impact than legal.

Economic Impact of Illegal Immigration

Illegal Immigration can have many different effects on the economy. Especially
effecting the labour market, causing shifts in wages, employment, and industries.
Illegal immigration can also have contributions on tax seeing as the effect of taxes
paid by undocumented immigrants can have a fiscal impact. Not to mention the fact
that it can affect social services and welfare, seeing as the costs and benefits of
providing public services to the population will increase and the economic growth will
shift due to immigration, regardless of whether it is legal or illegal, however illegal
may have more of a change in growth. Not to mention the costs of enforcement
seeing as different laws need to be put in place to control immigration, therefore
since money is then being used by the government there will be a shift in the
economy, and there are long-term integration factors that takes place after people
have immigrated.
In terms of the impact on the labour market, illegal immigration can have negative
and positive effects, seeing as one the one hand, undocumented immigrants may be
willing to work in more jobs that are undesirable to the native population, such as
construction, agriculture or low-skilled manufacturing therefore accepting lower
wages which would save businesses costs and potentially reducing consumer
prices, which in turn would lead to increased funds available within the company
itself, which directly links to increased profits for the business which helps the
economy to grow. However, on the other hand the influx of undocumented workers
can increase competition for jobs which could potentially lead to lower wages for the
citizens of the original country and the legal immigrants. This can be very significant
for industries with a large concentration of low-skilled workers (FANUUN, 2023).
Therefore, causing a huge difference between legal and illegal immigration clearly
illustrating the differences between them and the varying effects they both have on
the economy. This directly links with what (Paral, 2009) mentioned about the
disconnect between both legal and illegal immigration, especially how the highest
unemployment rates are found in countries located in manufacturing centres and
rural areas, seeing as they are willing to accept lower wages in result of receiving
perhaps a better life than their original country.
Regarding the fiscal impact on the economy, it would depend on various factors, the
education level that the illegal immigrants enter the country with varies which also
has a varying impact on the economy seeing as the net fiscal effects of immigration
depend on the migrants’ characteristics, the skill level of migrants was also found
likely to be one of the main determinants of their fiscal impact in the short run (Carlos
Vargas-Silva, 2022). Therefore, contributing to the fiscal change, Studies show that
low-skilled migrants who make less money are seen to pay less tax than high-skilled
migrants often in much more highly paid jobs who can be expected to pay more
taxes. Which then would reduce consumer spending as they have less disposable
income to spend which then causes a contraction in the fiscal policy seeing as the
government has less money to spend which in turn slows down the economy,
furthermore research supports that a large number of immigrants are highly skilled
(Oxford, 2022), although there was a decrease in this number due to external
shocks, which has therefore led to an extension in the fiscal policy and more space
for the economy to grow.

Figure 1: Shows a diagram illustrating the surplus of highly skilled immigrant labour
as an impact of immigration.
Another significant impact of illegal immigration that legal immigration has less of, as
stated in (FANUUN, 2023), is the remittances, which means to send money back to
their home countries. According to the world bank, remittances to developing
countries has managed to reach a staggering record high rate of $540 billion in 2020
as stated in (FANUUN, 2023), with a significant portion coming from undocumented
immigrants. Understanding that these remittances are often what keeps families
afloat for struggling families it can unfortunately drain the host counties economy
which then causes the outflow of funds to decrease the domestic consumption and
investment which would affect the economic growth further.
Whereas the social services and welfare varies between household as many families
may not choose to collect benefits due to the stigma behind it or lack of knowledge
behind the subject of benefits. Therefore, considering them into the group of people
who do collect benefits would leave us with inaccurate results. Not to mention that if
you are not an EEA national then you would not be entitled to claim most benefits
unless you have migrated within one of the very limited exceptions. (Oxford, 2022)
also found that the negative net fiscal contribution of non-EEA migrants was primarily
due to the higher spending on the education of children, seeing as they are more
likely to have children born in the new country of residence.
Furthermore, not just looking at the social aspects to this change it would take a long
time for illegal immigrants to adjust to the new country of residence and may
experience linguistic, educational and institutional barriers such as religious
differences which can all impact different aspects of their life, which can again link
back to the economy. The fact that it is difficult for immigrants to access services like
healthcare and education lead to an increase in low-skilled jobs and lack of
economic growth due to the fear of deportation. The lack of access to healthcare
could also be due to fear of facing barriers such as legal, bureaucratic and language
obstacles. In some cases, lack of qualifications and linguistic barriers may be a
factor that hinders their integration. Moreover, public policy neglect could be a factor
in the US that affects their integration the different policies may be challenging to get
around. When immigrants find it harder to integrate through society it makes it worse
for the economy undocumented immigrants are then unable to contribute to the
economic growth in the same way that legal immigrants are since they do not need
to worry about deportation, even though they are twice as likely to start businesses
as than native-born citizens assuming ceterus paribus.
Overall, the volumes and costs associated with illegal migration have risen
exponentially (Jenrick, 2023), however seeing as illegal immigration has many
positive and negative impacts on the economy, the positive impacts cannot be left
unmentioned. Seeing as the effect on an economy are multifaceted and can be
influenced by several factors. It is imperative to mention that illegal immigrants’
labour, entrepreneurship, and tax contributions play a significant role in driving
economic growth. As the (Chair Cecilia Rouse, 2021) mentioned how imm9igrants
also make important contributions to the economy, specifically they have found that a
1% increase in the population share of immigrant college graduates increase patents
per capita by 9% to 18% in the USA.

Economic Impact of Legal Immigration

Although many of the factors affecting the economy are like the impact of illegal
immigration the effect on the economy varies hugely.
To immigrate legally to the UK there are a few visas available to use, in recent years
the regulations have gotten stricter to limit the number of immigrants travelling into a
certain country. For example, rules on the highly skilled migrant visa have gotten
stricter and thus harder to immigrate into the country. However economically having
only the highest skilled migrants means that they will have higher paying jobs due to
their qualifications meaning income rises and thus the economy grows (Government,
n.d.). This links well with work visa/study visa that are available for students who are
looking to get a degree or further education. Most immigrants who enter the country
this way then get a job and become a permanent resident of the country. Overall,
there are many positive impacts of immigrating for the receiving country
economically.
The impacts on the labour market, focussing on wages and employment, are that the
number of jobs in the UK economy are not fixed, therefore immigrants may complete
with existing workers in the UK for jobs, and may also cause the number of jobs to
increase (Vargas-Silva, 2023). This therefore grows the economy as incomes rise
and disposable income then increases leading to a growth in the economy. Not to
mention those in favour of immigration argue that immigration boosts the economy
seeing as it increases the labour supply and promotes innovation (Mollenkamp,
2023).
Legal immigration can also have a big impact on tax, it can be seen as the single
most important economic issue of concern when assessing the pros and cons of
immigration in the UK. In UCL’s (UCL, 2014) research it was discovered that
immigrants who entered the UK after the year 2000 have made positive fiscal
contributions regardless of there are of origin. Which further supports the degree that
immigrants receive tax credits and benefits compared with natives. Studies show
that recent immigrants are 43% less likely to receive state benefits or tax credits, this
is due to immigrants’ more favourable age-gender composition. The study at UCL
also shows that however, even when compared with natives of the same age,
gender composition, and education, recent immigrants are still 39% less likely than
natives to receive benefits.
When immigration occurs at natural levels, it can create a small increase in national
GDP, this occurs because the productivity of immigrants can boost the GDP by as
much as 0.4% in a single year (Gaille, 2018). Not to mention immigration also
encourages economic recovery seeing as immigrants are more likely to move to a
new location to pursue a job opportunity compared to a native-born citizen, meaning
that in places where people are struggling economically, they can stat to experience
recovery at a faster pace (Gaille, 2018), and seeing as highly skilled migrants are
entering the country even the high-tech jobs can be covered which keeps the labour
market moving forward due to their expertise.
In terms of socioeconomic impacts studies have shown that immigrants bring energy
and innovation to new countries and host countries are also enriched by cultural
diversity, not to mention that failing schools can be transformed (Gaskell, 2023). Due
to the different cultures and ways of thinking innovation is bloomed in different
countries. This also leads to different cultures being shared in the form of restaurants
which is not only bringing energy to the country but also enriching the diversity and
boosting the economy due to the profits from different businesses. When failing
schools are being transformed it led to a higher rate of graduates from high school
leading to better quality education and thus leading to more qualifies citizens that
can get more high-skilled jobs therefore better helping to contribute to the economy
and boost the incomes, not only ensuring a better quality of life but also a better
GDP per capita.
However, it goes without saying that regardless there are still negative implications of
immigration, even if it is legal, it can be argued that immigrants would harm low-
skilled labourers by taking jobs that workers would otherwise get or depressing
wages for native-born low-skilled workers (Mollenkamp, 2023). However, research at
Oxford university found that immigration has little or no impact on the average
employment or of existing workers (Oxford, 2022). Therefore, this goes against the
arguments against legal immigration. This doesn’t mean that immigrants don’t face
problems in the long term with integration and struggling to adapt to a new country,
by looking at these socioeconomic factors can help us to determine how much of an
effect immigration has to the economy, especially comparing it to illegal immigration.
Many families must endure discrimination after moving to a new country, not only in
jobs but for their children also in schools. This can be challenging for any family to
cope with. Not to mention immigration is also seen to be encouraging disease
transmission (Gaille, 2018), which then can exhaust hospital resources further
affecting the economy and government/tax revenue, especially in unprecedented
situations like a global pandemic immigration can have mass effects, however
usually disease is not the biggest factor effecting the economy, although it is still a
factor to be mindful of whilst considering the difference between legal and illegal
immigration.
Not to mention, the fact that putting in place laws still will have many economic
impacts seeing as it costs the governments money to create different laws. This
causes a shift in the economy. However, seeing as there are many highly skilled
migrants and the economy’s growth is already increasing due to the increase in legal
immigrants, assuming all other factors are held constant, then the costs of enforcing
immigration laws would not have that much of an impact on the economy.
Another possible drawback of legal immigration is the overcrowding and
overpopulation taking place due to the vast number of immigrants entering the
country. This can then put a lot of pressure on public services and cause other
serious problems such as lack of supplies and climate change to increase. In terms
of over-populating the country, the wealthy nations tend to attract the most
immigrants therefore due to the overpopulation, underpopulation can start to form in
the developing world which then causes an economic imbalance causing resource
access issues at local levels in regions where high level of immigration takes place
(Gaille, 2018).

Comparative analysis (859)

Both legal and illegal immigration have positive and negative impacts on the
economy as mentioned earlier. Legal immigration can lead to higher productivity,
higher tax revenue and a more diverse and skilled workforce which can then go on to
benefiting the economy. On the other hand, it can also lead to concerns about job
competition and strains on public services due to the overpopulation. Similarly illegal
immigration, whilst helping to fill labour needs and contributing to the economy it can
also lead to issues such as overcrowding, pressure of public labour and it can
contribute significantly to labour-market flexibility which can then enhance innovation
and economic growth. Efforts put in place to cut legal immigration can also have
negative effects seeing as immigrants drive business creation, fuel innovation and
not to mention immigration helps fill essential workforce needs. Therefore, both legal
and illegal immigration have their advantages and disadvantages, it is key to
manage immigration effectively to benefit from its gains while addressing any
potential drawbacks. It is also imperative to mention the extent to which the effects
truly make a difference to the economy and which advantages weigh the most value.
In terms of the labour market impact, as seen before legal immigration in most cases
contributes to a more stable and skilled labour force as most immigrants then go
through vetting processes before entering the country. Which consequently leads to
a more constant labour force. However, on the other hand illegal immigration can
lead to certain industries suffering with lower wages due to undocumented workers
choosing to accepting lower pay due to limited legal protections in most countries not
to mention a NAE report found that low-skilled immigrants were 18% more likely to
work in jobs that require unusual hours than other native-born counterparts not to
mention a study by the Bank of England found that a rise in immigration had a small
impact on overall wages – with a 10% increase in immigration – wages fell by 0.31%.
Seeing as immigrants are also consumers who buy goods and services, making laws
on immigration harsher could therefore shrink overall economic output (Kurt, 2023).
Moreover, a study conducted by Dustmann et al (Dustmann, 2013), finds the
negative effect of immigration for the lower paid: they found that a 1% increase in the
ratio of migrants to non-migrants leads to a 0.5% decrease for the poorest 10%.
Overall, the impact on wages is uncertain however it is certain that illegal
immigration has a greater impact in wages seeing as illegal immigrants are more
likely to accept lower wages therefore increasing the incentive for firms to lower
wages,

Figure 2: Shows a supply and demand diagram illustrating the effects of immigration
regarding wages and demand.
The varying tax contributions are caused by the fact that legal immigration typically
results in individual paying taxes and contributing to government revenues through
income, property, and sales taxes. Whereas illegal immigration may involve
individuals working off the books and potentially leading to reduced tax contributions
and a strain on public services. Again, proving that illegal immigration has a greater
impact on the economy. The fact that illegal immigrants may strain public services
like healthcare and education, as undocumented individuals using these services
without contributing proportionally though taxes it may lead to an imbalance and
unfairness within the economy due to these factors. However, seeing as legal
immigration causes individuals to have more access to social services, respective of
the eligibility requirements meaning that a more controlled use of public resources is
ensured.
Another differing factor between the two is the effect on entrepreneurship and
innovation it is true that both types of immigration drive innovation however which
drives it more and for what reason? Legal immigration can bring entrepreneurs and
skilled professionals who can then contribute to innovation and economic growth.
Especially due to the stricter immigration policies put in place by many countries
ensuring that many high-skilled migrants will enter the country. This can then lead to
economic growth and a rise in the national GDP per capital. In opposition to illegal
immigration in which the limited legal status may hinder entrepreneurship and
discourage investment in education and skills development. This is due to many
illegal immigrants having to flee from dangerous situations in their sending country
such as war or famine, this means that it was harder for them to get an education
and therefore being able to gain innovative skills and training to be an entrepreneur
does not come easily to them due to the circumstances, this may also be a pushing
factor for them to choose to immigrate, not to mention regulations getting stricter on
immigration therefore increases illegal immigration which then causes catastrophic
effects on the economy. This can then also link to the national security concerns
which in terms of legal immigration generally involves thorough background checks
and vetting processes which then reduced the risks of individuals with malicious
intent entering the country however seeing as this is not possible for undocumented
immigrants to do so this increases the natural security concerns which can in turn
decrease the GNH (Gross National Happiness). Further illustrating that illegal
immigration can have a greater impact on the economy not only regarding economic
but also socioeconomic impacts on different countries’ economies.

Socioeconomic Impacts

Legal immigration has multifaceted effects on the host country's economy. Firstly, it
influences the labour market by increasing the supply of workers in specific sectors,
potentially impacting wages for different segments of the workforce. Moreover, legal
immigrants play a vital role in driving economic growth through their tax
contributions, business ventures, and job creation endeavours. Studies indicate that
legal immigrants have a positive fiscal impact on the economy, often contributing
more to taxes than they consume in public services, highlighting their significant role
in the economic landscape.
Conversely, illegal immigration also exerts notable socioeconomic effects. In the
labour market, illegal immigration can have mixed consequences by filling essential
low-skilled positions while potentially exerting downward pressure on wages for
native-born workers. Despite challenges, illegal immigrants contribute to the
economy through tax payments, entrepreneurial activities, and job opportunities.
Additionally, a substantial impact of illegal immigration is the flow of remittances back
to their home countries, influencing both the host and home country's economies
significantly.
In summary, legal, and illegal immigration each bring distinct socioeconomic
implications. Legal immigration tends to have more positive impacts such as
fostering economic growth and generating tax revenues. On the other hand, illegal
immigration presents challenges in the labour market but also contributes
economically through taxes and entrepreneurial endeavours. Understanding these
dynamics is crucial for policymakers when formulating strategies to address
immigration issues.

Undocumented legal status can lead to a range of emotional challenges for

immigrants, particularly young adults. These challenges include feelings of
frustration, sadness, depression, fear, anxiety, shame, and insecurity about their
future and well-being. The emotional toll of being undocumented can result in low
self-esteem, pressure, fear of deportation, and anxiety about succeeding.
Additionally, the fear of law enforcement poses a constant threat to undocumented
individuals and their families, generating a mix of emotions such as shame and
exclusion (Elizibeth Vaquera, 2017).
Legalising unauthorized immigrants can have significant emotional implications.
While the legalization process may initially cause distress due to occupational stress,
discrimination, and limited access to services, it can ultimately lead to a sense of
belonging, increased self-esteem, and improved mental health outcomes. Having a
protected immigration status like DACA can enhance health outcomes by providing
educational opportunities, better access to healthcare, and empowering individuals
to engage in advocacy efforts (Luz M. Garcini, 2021).
In conclusion, both illegal and legal immigration have profound emotional impacts on
individuals. Undocumented status can trigger a range of negative emotions and
challenges among immigrants, especially young adults. On the other hand, legalizing
unauthorized immigrants can alleviate some emotional distress by providing a sense
of security and belonging. Understanding these emotional dynamics is crucial for
addressing the well-being and mental health of immigrants in host countries.

Policy implications

These findings in the effects of immigration on the economy leads to policies

needing to be adjusted by the government to ensure that the economy thrives. The
report on explaining the trends in UK immigration (Hatton, 2005), this illustrates how
the reason why the UKs net immigration has increased so dramatically this is seen to
be due to the immigration policies at home and abroad. Governments have
implemented many different immigration policies after finding reasons to which the
economy struggles due to changes in immigration, to help the economy for example
by increasing the labour supply. (Chair Cecilia Rouse, 2021) Immigration increases
the size of the labour force and therefore leading to higher economic output and
productivity (Portes, 2018). International migration has also been found to contribute
to spurring innovation and economic growth, seeing as immigrants are often more
likely to be mobile and then contribute to the efficient functioning of labour markets
(Chair Cecilia Rouse, 2021). These impacts after changing the economic policies
allow for the economy to be boosted and growing the economy massively especially
due to the growth in productivity. Certain policies would aim to fill labour needs and
create more jobs which can have a positive impact on the economy. However, we
must consider all aspects of creating policies, the government must carefully balance
economic needs whilst addressing political needs, seeing as governments face the
trade-off between economic openness and political closure when creating
immigration policies which can be difficult to manage but imperative to creating
efficient policies. Therefore, all these factors will need to be considered when
governments craft immigration policies.

Figure 3: Graph indicating the net migration over years.

Conclusion

In conclusion, the economic impact of immigration, whether legal or illegal, is a

complex and multifaceted issue extensive consequences for sending and receiving
countries, my analysis has delved into various aspects of the economic implication,
highlighting the labour market, tax contributions, social services, innovation and
overall economic growth whilst also focussing on the socioeconomic impact of
immigration. This comparison reveals distinct differences in their effects on the
economy, which again empathises the need for refinement and targeted policy
responses. While legal immigration often can contribute positively to economic
growth, tax revenues, and innovation, illegal immigration presents challenges such
as potential strain on public services, lower wages, and barriers to integration. Both
forms of immigration have their advantages and disadvantages, therefore
policymakers must be carefully considering these factors when crafting immigration
policies. Seeing as governments worldwide continue to struggle with immigration-
related challenged, the findings of this analysis emphasise the importance of
informed policymaking that considers not only economic factors but also
socioeconomic, cultural, and political aspects which are imperative to create a
balanced and effective approach to immigration regulations. Ultimately, it becomes
evident that whilst both legal and illegal immigration exert diverse influences on the
economy, illegal immigration creates a more long lasting and has a greater impact on
the economy. To summarise, after conducting research I can conclude that although,
technically speaking, illegal immigration does have more of an impact on the
economy itself, however if you take into consideration that this is a multifaceted
discussion it can be concluded that there are a multitude of other factors that affect
the impact of immigration, so in my opinion the effects of legal versus illegal
immigration balance out when considering other factors.

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Data

Figure 1: Shows a diagram illustrating the surplus of highly skilled immigrant labour
as an impact of immigration.
Figure 2: Shows a supply and demand diagram illustrating the effects of immigration
regarding wages and demand.

Figure 3: Graph indicating the net migration over years.