For each scenario, the USAGE model weighs the impact on such factors as public revenues and expenditures, the occupational mix and total employment of U.S. workers, the amount of capital owned by U.S. households, and price levels for imports and exports. This study finds that increased enforcement and reduced low‐skilled immigration have a significant negative impact on the income of U.S. households. Modest savings in public expenditures would be more than offset by losses in economic output and job opportunities for more skilled American workers. A policy that reduces the number of low‐skilled immigrant workers by 28.6 percent compared to projected levels would reduce U.S. household welfare by about 0.5 percent, or $80 billion.
In contrast, legalization of low‐skilled immigrant workers would yield significant income gains for American workers and households. Legalization would eliminate smugglers’ fees and other costs faced by illegal immigrants. It would also allow immigrants to have higher productivity and create more openings for Americans in higherskilled occupations. The positive impact for U.S. households of legalization under an optimal visa tax would be 1.27 percent of GDP or $180 billion.