Estimating the Economic Impact of the 2021 Dream Act

Abstract

In 2012 President Obama established Deferred Action for Childhood Arrivals, or DACA, providing legal protection for foreign nationals who arrived in the U.S. as children. In 2017 President Trump took steps to end DACA, only to be rebuffed by the courts. In 2021 President Biden reinstated DACA.

DACA protects only those who arrived as children under the age of 16 before June 2007. That leaves millions of other foreign nationals who arrived in the U.S. with their families, either as 16- or 17-year-olds before June 2007, or under the age of 18 in the subsequent nine years, without recourse to obtain employment or various other legal protections themselves. Recently proposed legislation – The 2021 Dream Act, co-sponsored by Senators Lindsey Graham and Richard Durbin – would make DACA’s protections permanent, while extending those protections to up to 500,000 other minors.

We estimate the economic and budgetary impact of the passage of the bill. Our analysis suggests that it would lock in the current gains from DACA, which include nearly $57 billion of additional federal tax revenue in the 2022-2031 budget window, and $92 billion in additional income for this population. By extending DACA’s protections, it would also generate nearly $20 billion of additional federal tax revenue in the 2022-2031 budget window, while boosting the income of those who gain this protection by approximately $26 billion. The total impact it would have on U.S. economic activity would be well above this increased income.

Because of the young age of most of these potential Dreamers, most of their increased earnings from obtaining legal status would accrue outside the budget window, which means that incremental revenues from passing the 2021 Dream Act would grow sharply in subsequent years.