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Labor Market Changes:

Reduced Workforce: Mass deportations cut 5% of the U.S. labor force, concentrated in low-wage sectors.

Higher Wages: Labor supply decreases (S1 to S2), causing wages to rise (W1 to W2).

Lower Employment: Increased wages lead to reduced hiring (Q1 to Q2) as businesses face higher costs.

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Industry Disruptions:

Agriculture suffers from unharvested crops and lower production as U.S.-born workers avoid low-paying, tough jobs.

Hospitality and other industries struggle to maintain services.

Broader Economic Effects:

Higher production costs result in more expensive food and services, increasing inflation.

Rising prices reduce consumer spending, slowing business growth and overall economic progress.

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Illegal Immigration Reform and Enforcement Act in Georgia, 2011 (Part. 1)

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Illegal Immigration Reform and Enforcement Act in Georgia, 2011 (Part. 1)

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Economic Loss

The immigration crackdown led to $140 million in agricultural losses as crops rotted in the fields.

Labor Shortages

A lack of essential undocumented labor delayed harvesting, as there was no valid replacement workforce.

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Opportunity Costs:
Deportation efforts costing $88 billion annually highlight opportunity costs, as these funds could instead support education, healthcare, or infrastructure. This showcases the trade-offs when allocating limited resources.

Market Equilibrium:
The disruption in labor supply will cause labor shortages, leading to higher wages and increased product prices, destabilizing market equilibrium.

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Illegal Immigration Reform and Enforcement Act in Georgia, 2011 (Part. 2)

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Illegal Immigration Reform and Enforcement Act in Georgia, 2011 (Part. 2)

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Ripple Effects

The agricultural losses impacted related industries such as transportation, processing, and retail.

Economic Principle

Demonstrates the inelasticity of labor supply in agriculture.

Highlights a major downside cost of deportation policies, including reduced consumer surplus and higher prices for essential goods.

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Introduction to the Debate on Mass Deportations

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Introduction to the Debate on Mass Deportations

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Policy Proposal Overview:

U.S. President-elect Donald Trump has proposed the largest deportation effort in American history, targeting 15–20 million undocumented immigrants. Initial plans focus on deporting 1 million annually, prioritizing individuals with criminal records.

Economic Significance:
Undocumented immigrants constitute nearly 5% of the U.S. workforce, especially in critical sectors like agriculture, construction, and hospitality. Their removal poses significant economic challenges.

Key Question: How would such mass deportations impact the U.S. economy?

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High Costs:

Deportation could cost $88 billion every year.

GDP might shrink by 1.2%–7.4%, and inflation could rise.

Job and Price Problems:

Losing workers in labor-intensive industries might cause labor shortages.

Higher wages and production costs might lead to more expensive food and goods.

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What Trump’s Mass Deportations Would Mean for the U.S. Economy

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The economic costs of such a campaign may be bigger than the president-elect has bargained for.

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Economic applications Chapter 19 Moral Hazards:

Policy may have hidden agendas.

EX - Inequality, reduced competition, and less innovation.

Other business that cannot operate will be driven to bankruptcy. Leading to possibly monopolization.

These are things are reflected in the equilibrium model. Businesses that cannot keep up with the costs of labor will go out of business.

Businesses whose workforce comprise of mainly immigrants will need to find employees to replace them.

Changes in consumer behavior can be a result of the bag ban.

The increased demand for reusable bags, garbage bags, and other materials will skyrocket, as will the waste of materials used for those bags. People will discard those bags and continue to use duplicates.

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Economic Context Chapter 20 Risk:

Risk Aversion: Government should try to offer naturalization for illegal immigrants. (Lessening risk of no workers in Agricultural Sector)

Diversification: Provide a phase out in the policy to replace workers as opposed to mass deportation. (Spreading the risk while still maintaining some form of immigration).

Revamp work visas for immigrants that do not plan to become naturalization and are here for employment.

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Alabama (2011) Taxpayer and Citizen Protection Act (Part 1)

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Alabama (2011) Taxpayer and Citizen Protection Act (Part 1)

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Economic Disruptions:

Law caused widespread labor shortages.

Specifically, in agriculture and construction.

Production Declines:

Farmers left crops unharvested

Construction projects faced significant delays due to insufficient labor.

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Alabama (2011) Taxpayer and Citizen Protection Act (Part 2)

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Alabama (2011) Taxpayer and Citizen Protection Act (Part 2)

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Ripple Effects:

The labor shortages extended to industries that were dependent on agriculture and construction, reducing economic output.

Economic Principle:

Highlights the negative externalities of deportation policies.

This Includes:

Rising wages that increased production costs.

Shrinking consumer and producer surplus, and slowing economic growth.

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Consumer Surplus: Consumers will have to pay closer to their maximum willingness for these goods.

Producer Surplus: Fewer workers reduce productivity, increasing costs and squeezing profits.

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Undocumented Immigrants: Face detention, deportation, and separation from families, causing financial and emotional hardship

Low-wage sectors: Labor shortages lead to higher costs and reduced productivity (less experienced workers)

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Externalities: Consumers will face a negative externality in the form of higher cost of living.

Labor Market Dynamics: J.D. Vance argues that deportations would raise wages for U.S. born workers, but firms who have to pay higher wages to attract U.S. born workers may reduce hiring or cut production, lowering overall employment.

Research on the Obama administration's "Secure Communities" program supports this idea. It showed that mass deportations led to job losses for Americans since firms responded by reducing overall employment or automating tasks instead of hiring new workers.

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Labor Market Disruptions: Reduced labor supply raises wages but also reduces employment as businesses cut production

Economic Costs: Deportations reduce GDP and cause inflation due to rising production costs

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Ethical Debate: Raises human rights concerns, especially for families with mixed immigration status

Fairness & Equity: The policy disproportionately impacts vulnerable communities and labor sectors

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Efficiency: Deportation costs ($88B annually) outweigh the economic benefits, with better returns possible through alternative investments (education, healthcare, etc.)

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Expand Work Visas for Critical Sectors:

By expanding work visa programs, we can ensure that low-wage industries have a stable, legal workforce.

Introduce temporary work visas for undocumented workers in sectors with persistent labor shortages, and optimize the process for employers to hire foreign workers legally.

Provide Support for Workforce Retraining:

If deportations lead to labor shortages in certain sectors, there may be job opportunities for U.S.-born workers, but they may not have the skills needed for those positions.

We could invest in retraining programs for U.S.-born workers to help match the supply of workers to the demand for labor in those industries.