Most early research on the impact of undocumented workers on the labor market held that it results in the widespread displacement of native workers. More recent and more sophisticated theory argues that immigrants, both legal and illegal, create jobs by consuming goods and services, and by starting new businesses. This latter idea may not be as generally true as some researchers have asserted, but recent findings do suggest that there is not a strong, positive correlation between the presence of undocumented workers and high unemployment rates. Even so, the issue of native worker replacement continues to be controversial (especially where blacks are concerned). Advocates on both sides have been unable to articulate strong methodological challenges to their opponents' studies. Actually, when the effects of undocumented immigration are analyzed in isolation, one cannot avoid the conclusion that both displacement and wage depression take place. This approach, however, fails to take into account compensating factors accompanying influxes of undocumented workers that tend to offset initial wage depression and displacement, including increased demand for goods and services, increased productivity, and lower prices. In short, the net, macroeconomic effects of recent immigrant flows appear to be neutral, or even positive. This finding presents an opportunity to direct the policy and legislative debate on immigration away from ideology and toward a greater, more critical understanding of the empirical data. (KH)