The sector-by-sector consequences of mass deportations in the US
The sectors most exposed to mass deportations are construction, agriculture, parts of manufacturing and several service sectors.
While a successful campaign of mass deportations from the US is not part of our baseline forecasts, it represents a substantial downside risk as it would likely raise costs and deplete demand.
If this downside risk materializes, we see the negative sectoral impacts being transmitted through two channels. Decreasing the supply of labour will put upwards pressure on wages and costs, which would lead to higher prices for consumers. Sectors that are unable to find replacement workers or pass on costs to consumers would also likely see output losses.
The construction sector employs the most undocumented immigrants on an absolute basis and has an extremely high undocumented share of its total workforce, according to our estimates. A deportation campaign that removes even 50% of this workforce could lead to significant labour shortages and cut compound growth rates by half over the course of the Trump administration.
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