The Penn Wharton Budget Model recently released a brief finding that 1968 Wharton graduate and President Donald Trump’s administration immigration policy would significantly reduce United States economic output and increase the federal budget deficit by nearly $1 trillion over the next decade.
The brief — which was released on July 28 — came as the Trump administration works to enforce its mass deportation immigration policy. The model examined two hypothetical deportation policy scenarios and found that both possibilities impacted several economic indicators, including a significant decrease in real GDP, average wage, and output per capita.
"It is well known that mass deportation reduces aggregate economic variables like GDP due to scale effects," read the brief's summary. "We project that deportation also reduces wages of high-skill workers, compromising 63% of workers."
The budget model found that deportation policies would decrease tax revenue by $187.4 billion from 2025 to 2034. The brief also projected that the deportation process — which includes "arresting, detaining, processing, and removing large numbers of undocumented immigrants" — yields an estimated total cost of $70,236 per deportee.
Under a 4-year policy that removes 10% of unauthorized immigrants annually from 2025 to 2028, the federal primary deficit would rise by $270 billion in conventional terms and $350 billion when accounting for economic effects.
The brief also projects that a 10-year policy, which eliminates all unauthorized immigrants and prevents new inflows, would increase deficits by $862 billion before economic feedback effects and $987 billion after them. By 2034, the projection predicts that the GDP would decrease by 1% under the 4-year plan and 4.9% under the 10-year plan, with losses continuing to grow over the following two decades.
The brief models two approaches, one where deportations occur rapidly over four years with immigration returning to baseline, and one where deportations continue for a decade with no new unauthorized immigrants entering. Both policies impose large fiscal costs in addition to the $170 billion already allocated under the 2025 Omnibus Border and Budget Reconciliation Act for enforcement.
The report also projects long-term macroeconomic effects. By 2034, GDP would decline 1% under the 4-year scenario and 3.3% under the 10-year scenario. Capital, hours worked, and consumption all fall, while federal debt rises by 1.7% in the 4-year case and 5.4% in the 10-year case.
RELATED:
Penn faculty, policy experts reflect on Trump-era shifts in U.S. health care policies
The distributional analysis varies across income brackets. Authorized low-skilled workers initially see wage gains — 1.1% in the 4-year plan and 5% in the 10-year plan — but those gains diminish or reverse over time. High-skilled workers experience wage losses in both cases, falling by up to 2.8% by 2054 in the longer policy.
The brief also highlights differences across generations. Retirees gain under both policies, while working-age households lose thousands of dollars in average resources.
