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Immigration Reform and the Earnings of Latino Workers: Do Employer Sanctions Cause Discrimination?

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  • C. Bansak
  • S. Raphael

Abstract

This paper investigates whether employer sanctions for hiring undocumented workers introduced by the 1986 Immigration Reform and Control Act (IRCA) adversely affected the hourly earnings of Latino workers in the southwestern United States. We exploit the staggering of the sanctions and employee verification requirements across sectors to estimate this effect. In particular, IRCA’s employer-sanctions provisions were not extended to agricultural employers until 2 years after their imposition on nonagricultural employers. Hence, Latino agricultural workers provide a control group against which to compare changes in the wages of Latinos in nonagricultural employment. We find substantial pre-post IRCA declines in the hourly earnings of Latino nonagricultural workers relative to Latinos in agriculture. This pattern, however, is considerably stronger for Latino men than Latina women. We do not observe similar intersectoral shifts in relative wages among non-Latino white workers. In fact, the relative wage changes for non-Latino white workers are of the opposite sign. Finally, the pre-post IRCA relative decline in Latino nonagricultural wages reverses the pre-IRCA trend in which the relative earnings of Latino nonagricultural workers had been increasing.

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Bibliographic Info

Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1181-98.

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Handle: RePEc:wop:wispod:1181-98

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  1. B. Lowell & Jay Teachman & Zhongren Jing, 1995. "Unintended consequences of Immigration Reform: Discrimination and hispanic employment," Demography, Springer, vol. 32(4), pages 617-628, November.
  2. Daniel S. Hamermesh & Stephen J. Trejo, 1997. "The Demand for Hours of Labor: Direct Evidence from California," NBER Working Papers 5973, National Bureau of Economic Research, Inc.
  3. Kenney, Genevieve M & Wissoker, Douglas A, 1994. "An Analysis of the Correlates of Discrimination Facing Young Hispanic Job-Seekers," American Economic Review, American Economic Association, vol. 84(3), pages 674-83, June.
  4. repec:fth:calaec:12-98 is not listed on IDEAS
  5. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  6. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-33, April.
  7. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
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Cited by:
  1. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," NBER Working Papers 12141, National Bureau of Economic Research, Inc.
  2. Pia M. Orrenius & Madeline Zavodny, 2001. "Do amnesty programs encourage illegal immigration? evidence from IRCA," Working Papers 0103, Federal Reserve Bank of Dallas.
  3. Di Pietro, Giorgio, 2009. "Military Conscription and University Enrolment: Evidence from Italy," IZA Discussion Papers 4212, Institute for the Study of Labor (IZA).
  4. Catalina Amuedo-Dorantes & Cynthia Bansak & Allan A. Zebedee, 2014. "On the Effectiveness of SB1070 in Arizona," CReAM Discussion Paper Series 1424, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Amuedo-Dorantes, Catalina & Bansak, Cynthia, 2013. "Employment Verification Mandates and the Labor Market Outcomes of Likely Unauthorized and Native Workers," IZA Discussion Papers 7419, Institute for the Study of Labor (IZA).
  6. Partridge, Mark D. & Olfert, M. Rose & Ali, Kamar, 2009. "Towards a Rural Development Policy: Lessons from the United States and Canada," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).
  7. Lofstrom, Magnus & Hill, Laura E. & Hayes, Joseph, 2010. "Did Employer Sanctions Lose Their Bite? Labor Market Effects of Immigrant Legalization," IZA Discussion Papers 4972, Institute for the Study of Labor (IZA).
  8. Catalina Amuedo-Dorantes & Cynthia Bansak, 2011. "The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey," CReAM Discussion Paper Series 1106, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  9. Bohn, Sarah & Lofstrom, Magnus & Raphael, Steven, 2011. "Did the 2007 Legal Arizona Workers Act Reduce the State's Unauthorized Immigrant Population?," IZA Discussion Papers 5682, Institute for the Study of Labor (IZA).
  10. Pia M. Orrenius & Madeline Zavodny, 2001. "Do amnesty programs encourage illegal immigration? Evidence from the Immigration Reform and Control Act (IRCA)," Working Paper 2001-19, Federal Reserve Bank of Atlanta.
  11. Catalina Amuedo-Dorantes & Cynthia Bansak, 2013. "Employment Verification Mandates and the Labor Market Outcomes of Likely Unauthorized and Native Workers," CReAM Discussion Paper Series 1312, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  12. Pia M. Orrenius & Madeline Zavodny, 2005. "Did 9/11 worsen the job prospects of Hispanic immigrants?," Working Papers 0508, Federal Reserve Bank of Dallas.
  13. Pia Orrenius & Madeline Zavodny, 2003. "Do amnesty programs reduce undocumented immigration? Evidence from Irca," Demography, Springer, vol. 40(3), pages 437-450, August.
  14. Julie Phillips & Douglas Massey, 1999. "The new labor market: Immigrants and wages after IRCA," Demography, Springer, vol. 36(2), pages 233-246, May.
  15. Pia M. Orrenius & Madeline Zavodny, 2004. "What are the consequences of an amnesty for undocumented immigrants?," Working Paper 2004-10, Federal Reserve Bank of Atlanta.
  16. Sunding, David L. & Zwane, Alix Peterson, 2004. "Local Public Goods And Ethnic Diversity: Evidence From The Immigration Reform And Control Act," 2004 Annual meeting, August 1-4, Denver, CO 20356, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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