WHEN ARIZONA lawmakers enacted legislation last year inflating the power of police officers to check immigration status when they make even routine stops, they staked out a reputation for the state as a citadel of intolerance. That was by design, for their explicit purpose was to drive away the hundreds of thousands of illegal immigrants who, lured by jobs and a booming economy, had arrived in the state in the preceding 10 or 15 years.

The law, hung up by constitutional challenges, has never taken full effect. But it has had an important unintended consequence — as a wake-up call to the nation’s business community, for which a policy aimed at deporting millions of undocumented workers is economic lunacy.

Thanks largely to a backlash from business, state legislatures elsewhere have balked at adopting Arizona-style laws, though a few, particularly in the South, have passed bills designed to deny opportunities to illegal immigrants and keep them in the shadows. The business backlash is motivated partly by fears that other states could suffer Arizona’s fate: boycotts and cancellations that have meant tens of millions of dollars in lost revenue for hotels, restaurants and other businesses that rely on visitors. But businesses also fear the potential economic damage from mass deportation. A new report by the Center for American Progress and the Immigration Policy Center, groups that are sympathetic to illegal immigrants but intellectually serious, examines those costs in detail and concludes that they would be staggering.

The report, “A Rising Tide or a Shrinking Pie,” shows that the effect of full-scale deportation of illegal immigrants in Arizona would be tantamount to a major recession, quite possibly more severe that that of 2008-09. Undocumented workers, who make up 7 percent of Arizona’s population and 9.4 percent of its workforce, are critical to the state’s economic health; not only do they do vital jobs that others will not, they also shop, pay rent, pay taxes and sustain the jobs of many other, legal workers.

A worst-case scenario, in which all of Arizona’s 445,000 illegal immigrants are deported, is highly unlikely. If it did take place, however, Arizona’s economy would shrink by nearly 20 percent, total employment would contract by 17 percent and state tax revenue would be slashed by 10 percent, the report estimates. Deporting even a third of Arizona’s illegal immigrants would cost the state $1 billion in annual revenue.

Conversely, if the federal government were to grant legal status to undocumented immigrants, the report reckons, it would help close a wage gap between legal and illegal workers, increasing productivity and disposable income. The results would include 261,000 new jobs and $1.7 billion in higher tax revenue.

The report is not definitive. For instance, it makes no attempt to calculate the costs of providing services that state and local government would incur from mass legalization. Nor does it try to estimate the fiscal benefits of mass deportation, including savings for school systems that are constitutionally obligated to educate the children of illegal immigrants.

Nonetheless, it provides a useful reminder that the fantasy of deporting millions of undocumented workers — a large majority of whom have been here for more than a decade and who provide valuable and in many cases skilled or semi-skilled labor — is economic suicide.