Applied Psychology OPUS

A Psychological Explanation of Undocumented Immigrants’ Participation in the U.S Economy

Ahmed Alif and Bryan S. Nelson

Current literature demonstrates a lack of understanding about how undocumented immigrants participate in the American economy (Martin, 2006; Davidson, 2013). The most common belief is that undocumented immigrants do not pay taxes, and therefore do not contribute to the American economy (Martin, 2006; Davidson, 2013). Opponents of undocumented immigration assert that undocumented immigrants are burdensome to the American economy because they take jobs away from Americans (Martin, 2006; Davidson, 2013). Hillary Clinton has even stated that each immigrant imposes a lifetime cost of $25,000, utilizing more government services than they are paying for in taxes (Martin, 2006; Davidson, 2013). However, research indicates that undocumented immigrants are not utilizing more services than they are paying for in taxes, because immigrants contribute over $7 billion annually to Social Security, accounting for 10% of the 2004 Social Security surplus, as well as over $1.5 billion in Medicare taxes (Martin, 2006; Porter, 2005).

Research over the last decade has made strides to deconstruct the positive impact of undocumented immigrants on the economy (Davidson, 2013; Fears, 2005; Porter, 2005). It has demonstrated that undocumented immigrants are not hurting the American economy; in fact, they are helping support it (Davidson, 2013; Fears, 2005; Porter, 2005). Specifically, they work long hours for low wages and participate in the economy by paying taxes (Davidson, 2013; Fears, 2005; Porter, 2005). If annual immigration increased by 400,000, the current national debt of $16 trillion would be reduced by 0.25%, saving $500 billion (Fears, 2005; Porter, 2005). Opponents have suggested mass deportation of all undocumented immigrants (Fears, 2005; Porter, 2005). However, deportation is not even a feasible solution as it would cost $41 billion annually, consequently burdening the current economy (Fears, 2005; Porter, 2005).

Previous literature on undocumented immigrants has highlighted the hardships and struggles facing them and the reasons as to why maintaining good moral character is important to them in regards to their immigration status (Pérez, Espinoza, Ramos, Coronado, & Cortes, 2009). Little is known about the factors that influence immigrants’ participation in the economy and culture, particularly factors that influence their interest in future legalization (Gonzalez, Suarez-Orcozo & Dedious-Sanguineti, 2013). By examining the psychological and cultural factors that influence undocumented immigrant participation in the economy, we will better understand how undocumented immigrants are viewed within the context of the American economy.

Tax Activity of Undocumented Immigrants

Largely unknown, many undocumented immigrants actually willingly pay taxes to a system that does not recognize them (Chavez, Hubbell, Mishra & Valdez, 1997; Davidson, 2013; Gonzalez et al., 2013; IRS, 2013; Martin, 2006). Many of them use Individual Tax-Payer Identification Numbers (ITIN) to pay taxes and continue to work hard in the hopes that they can one day legalize their status. Some undocumented immigrants even use ITIN to receive business licenses  (Chavez et al., 1997; Davidson, 2013; Gonzalez et al., 2013; IRS, 2013; Martin, 2006). Even though they pay taxes, they remain ineligible for government-funded benefits such as food stamps, Medicare, and social security benefits (Fears, 2005; Porter, 2005). Additional difficulties that undocumented immigrants face include not being able to vote, receive financial aid for college, obtain a drivers license in most states, or have access to primary health care (Gonzalez et al., 2013; Pérez, Cortés, Ramos, & Coronado, 2010). Many of these families live with complete financial instability (Gonzalez et al., 2013; Pérez et al., 2010). The average household income is approximately 40% lower than native and documented households, and 2/3 of undocumented students report coming from low-income households (Batalova & McHugh, 2010; Gonzalez et al., 2013). Moreover, they are unable to get financing or apply for loans, leading to increased responsibility for children of undocumented immigrants to support their parents financially (Gonzalez et al., 2013).

Despite these hardships, most undocumented immigrants do not intend to cheat the economy or break the law because they want to legalize their status in order to stay with their families in the United States (Gonzalez et al., 2013; Vargas, 2011). The majority have American-born children who can sponsor them at the age of 21 and, in order to legalize their status, they must pay taxes, be a person of good moral character, refrain from taking government benefits, and go through positive acculturation processes like other immigrants who have taken a different avenue to be considered legal (Gonzalez et al., 2013; Vargas, 2011).
Psychological and Health Implications

There are specific subpopulations of undocumented immigrants that desperately want to legalize their status through tax payment and positive acculturation processes, such as the “DREAMers”, also known as the 1.5 generation. These “DREAMers” are undocumented immigrant youth that came to the United States as children and adolescents (Vargas, 2011; Gonzalez et al., 2013; Pérez et al., 2010). Most “DREAMers” are unaware of their undocumented status until they attempt to go through a similar rite of passage as their peers, such as getting a learner’s permit on their sixteenth birthday, only to discover that they cannot due to their immigration status (Gonzalez et al., 2013; Vargas, 2011). Exclusion from everyday milestones can lead to confusion, fear, uncertainty, and guilt (Ford & Shoichet, 2013; Gonzalez et al., 2013; Vargas, 2011; Pérez et al., 2010; Stacciarini et al., 2014). Many undocumented immigrants feel they are risking their future by spending time and money on college, a career, or family when everything they own can be taken away at any time (Ford & Shoichet, 2013; Gonzalez et al., 2013; Vargas, 2011; Pérez et al., 2010; Stacciarini et al., 2014).

These problems are not specific only to “DREAMers”, as simple everyday activities such as driving a car or going to work can be stressful experiences for many undocumented immigrants (Ford & Shoichet, 2013; Gonzalez et al., 2013; Stacciarini et al., 2014). They face constant, chronic risk of apprehension and deportation; nationally, 50% of undocumented Latinos worry about deportation, making them not only scared for themselves but also for their family members (Ford & Shoichet, 2013; Gonzalez et al., 2013; Stacciarini et al., 2014). One of the hardest psychological burdens they carry is keeping their identity a secret from their peers and partners, leading to the formation of guilt and self- hatred (Gonzalez et al., 2013). In some cases, undocumented immigrants respond to this chronic stress with suicide (Gonzalez et al., 2013). In other cases, the stress may manifest in the form of medical consequences, such as high blood pressure and diabetes (APA, 2011; Choi, 2012; Gonzalez et al., 2013; Ricketts & Goldsmith, 2005). In fact, the most vulnerable immigrant population at risk of obesity and stress-related health consequences are undocumented immigrants because of their constant fear and lack of health care (Lauderdale & Rathouz, 2000; Wallace et al., 2013). Additionally, the prevalence of post-traumatic stress disorder caused by immigration related anxiety is highest among undocumented immigrants out of all immigrant populations (Choi, 2012; Gonzalez et al., 2013; Pérez et al., 2010; Ricketts & Goldsmith, 2000; Vargas, 2011). Furthering the problem, these undocumented immigrants receive very little mental health or physical health related support because the majority of them cannot obtain health insurance (Choi, 2012; Ricketts & Goldsmith, 2005).

In line with the issue of having no medical insurance, most undocumented immigrants have to seek medical attention via emergency room visits where their immigration status is not questioned (Derose, Bahney & Lurie, 2009; Martin, 2006; Ricketts & Goldsmith, 2005). There remains a large discrepancy in the national budget estimates for the health care cost of undocumented immigrants (Derose et al., 2009; Martin, 2006; Ricketts & Goldsmith, 2005). State and federal level policy makers argue that undocumented immigrants and their children do not contribute anything to the economy and utilize government hospitals and schools for free (Martin, 2006). The Federation for Immigration Reform reports that New York State spends over $300 million annually on emergency room visits for undocumented immigrants (Martin, 2006). However, research has revealed that, on average, undocumented immigrants incur less health care cost than the U.S.-born population (Derose et al., 2009; National Immigration Law Center, 2014). Though the research shows their limited access to health care may not be a large economic burden on America, limited access to continued care is still burdensome to the individual undocumented immigrant (Derose et al., 2009; Martin, 2006; Ricketts & Goldsmith, 2005). Lack of access to health care can have dangerous psychological and health implication leading to depression and anxiety as reported by many undocumented immigrants  (Gonzalez et al., 2013; Pérez et al., 2010; Ricketts & Goldsmith, 2000; Vargas, 2011).


There are many misconceptions about undocumented immigrants and their roles within the American economy. Some of these assumptions are that they do not pay taxes and they are burdensome to the American economy because they use government institutions such as schools and hospitals for free (Davidson, 2013; Martin, 2006). However, studies discussed in this literature review have revealed that the majority of undocumented immigrants actually file taxes using ITIN in hopes to legalize their status and they do not incur more cost than U.S.-born population for health care (Batalova & McHugh, 2010; Chavez, 1997; IRS, 2013). Despite having legal limitations and low socioeconomic status, the majority of undocumented immigrants prevail through severe hardship in the hopes of permanently settling in the United States with legal status (Gonzalez et al., 2013; Pérez et al., 2010). Studies on populations such as the “DREAMers” (the 1.5 generation) have revealed that there is severe psychological distress facing undocumented immigrants because they are denied the liberty to live freely like every other American (Gonzalez et al., 2013; Pérez et al., 2010).

Additionally, this review of the literature has demonstrated that a vast majority of undocumented immigrants want to stay in the United States with their family and friends, but there is no pathway or process for them to legalize their status, except by being sponsored by their U.S.-born children after they turn 21 years old (Batalova & McHugh, 2010; Vargas, 2011). Undocumented immigrants are the most vulnerable immigrant group prone to stress-related health and psychological disorders (Ricketts & Goldsmith, 2005). Due to lack of primary care and health insurance, they cannot seek help unless they visit emergency rooms, often leaving their health needs untreated (Derose et al., 2009; Martin, 2006; Ricketts & Goldsmith, 2005). Although government agencies have budgeted specific amounts of funding for undocumented immigrant health and education costs, the transparency of how the money is being utilized is not clear and future studies need to clarify the discrepancy among estimates (Derose et al., 2009; Martin, 2006; National Immigration Law Center, 2014; Ricketts & Goldsmith, 2005).

Additionally, researchers should attempt to expand the study of undocumented immigrant populations in general because there are roughly 11 million undocumented immigrants living in the United States and they are our peers, co-workers and friends, living their lives in constant fear of being deported at any moment (Gonzalez et al., 2013; Vargas, 2011). Further research could contribute to policy reform and solutions to their segmented health care access.


Authors' Note: We would like to express our deepest appreciation to our professors, Dr. Sumie Okazaki and Dr. Stacey Alicea, who have guided us throughout the process of developing this paper. We owe our sincerest gratitude to Riya Ahmed, Susan Pomilla, Jemair Lewis, and Aimee Nelson for reviewing earlier drafts of this paper.


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