Immigration Enforcement Visibility and Consumer Spending

Uma De Balanzo (), Rodríguez-Planas, Núria () and Jennifer Roff ()
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Uma De Balanzo: Bocconi University
Rodríguez-Planas, Núria: Queens College, CUNY
Jennifer Roff: Queens College, CUNY

No 18620, IZA Discussion Papers from IZA Network @ LISER

Abstract: 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

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: 2026-05
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