The Effects of Immigration Enforcement (E-Verify) on Agricultural Firm Dynamics: Evidence from NETS

This study investigates the effects of state-level mandatory E-Verify laws on firm performance in labor-dependent sectors, focusing primarily on U.S. agricultural firms. Using the National Establishment Time Series (NETS) dataset, which provides firm-level sales, employment, and geographic information, we analyze more than 14 million farm-year observations from 1990 to 2019 and exploit the staggered adoption of private-sector E-Verify mandates across seven states. Employing multiple causal identification strategies we find consistent evidence that E-Verify significantly reduces both farm sales and employment. On average, sales decline by about 5 percent and employment by about 3 percent after policy implementation, with effects emerging soon after adoption and persisting over time. The impacts are not uniform across firms: small farms and labor-intensive subsectors such as fruits, vegetables, nurseries, and farm labor contractors experience the largest losses, while larger farms appear more resilient, likely due to greater access to mechanization or alternative labor sources. Geographic results further show that farms located far from borders with non-mandating states face larger declines, suggesting that cross-border labor market access partly offsets enforcement effects. Extending the analysis beyond agriculture, we also document negative impacts in hospitality, food service, and construction industries, while placebo sectors such as finance, insurance, and utilities show little measurable effect. Overall, the findings indicate that E-Verify functions as a negative labor supply shock in sectors highly dependent on immigrant labor, reducing firm scale and productive capacity while disproportionately burdening smaller and labor-intensive businesses.