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IZA Discussion Paper No. 18620
May 2026
Immigration Enforcement Visibility and Consumer Spending

We exploit the sharp escalation in community-based ICE enforcement following the January 2025 presidential transition to estimate its causal effect on consumer spending. Using Synthetic DiD with cross-state variation in surge intensity, aggregate card spending fell 1.7 percentage points in high-enforcement states — an effect robust to covariate adjustment, and pre-tariff truncation. Null estimates for jail-based arrests and non-in-person commerce, where enforcement is invisible to surrounding communities, rule out a broad regional demand shock and isolate enforcement visibility as the operative mechanism. Sector-level estimates reveal two empirically distinct channels: in states with Democratic governors, aggregate spending fell 4.1 pp (p<0.01), driven by Accommodation & Food (−2.3 pp) and Arts & Entertainment(−7.3 pp), consistent with behavioral withdrawal from public commercial life where enforcement was most visible. In Trump-voting states, Home Improvement Centers and Transportation & Warehousing fell 3.8 pp and 3.0 pp respectively, consistent with labor supply disruption in undocumented construction employment. Economic costs extend well beyond the directly targeted population and depend on the mode of enforcement.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer-ext@liser.lu
+352 585-855-501
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Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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