Immigration Enforcement Visibility and Consumer Spending

Uma De Balanzo, Nuria Rodriguez-Planas, Jennifer Roff and Núria Rodríguez-Planas

No 12662, CESifo Working Paper Series from CESifo

Abstract: We exploit the sharp escalation in community-based ICE enforcement following the January 2025 inauguration to estimate the causal effect of immigration enforcement on consumer spending. Using Synthetic Difference-in-Differences with cross-state variation in surge intensity as the identifying variation, we find that states experiencing the largest enforcement surges saw aggregate card spending decline by 1.7 percentage points relative to their SDiD counterfactual, an effect robust to covariate adjustment, alternative shock windows, and pre-tariff truncation. Null estimates for non-in-person spending rule out a broad regional demand shock, while null estimates for jail-based arrests (enforcement invisible to surrounding communities) isolate enforcement visibility as the operative mechanism. Sector-level estimates reveal two empirically distinct channels: in states with Democratic governors, aggregate spending fell by −4.1 pp (p

Keywords: immigration enforcement; consumer spending; synthetic difference-in-differences; ICE arrests; local labor markets (search for similar items in EconPapers)
JEL-codes: E21 J15 R11 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12662

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