41st Annual Conference on Macroeconomics, 2026

Why It Matters

The finding mitigates worries that mass low‑skilled inflows will stoke inflation, signaling the Fed should be cautious about tightening policy in response to immigration‑driven population growth. It also reframes labor‑market and regional policy discussions by emphasizing demand offsets and persistent skill composition effects.

Summary

Researchers presented at the 41st MBR Macroeconomics conference that the 2021–24 U.S. population increase of roughly 10 million was driven largely by unauthorized, low‑skilled immigrants—primarily from 11 Central and South American countries—whose arrival was widespread across 39 states. Using CPS and PSID data with a proxy for legal status and a calibrated heterogeneous‑agent DSG model, the authors show these newcomers are low‑skilled, hand‑to‑mouth consumers and that their labor‑market characteristics are persistent. The model implies the low‑skilled immigration surge raised actual and potential output by similar amounts, leaving the output gap and inflation little changed. The principal policy takeaway is that monetary authorities should avoid overreacting to such supply‑side immigration shocks.