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The Economic Effects of Providing Legal Status to DREAMers

Author

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  • Ortega, Francesc

    () (Queens College, CUNY)

  • Edwards, Ryan

    () (University of California, Berkeley)

  • Hsin, Amy

    () (Queens College, CUNY)

Abstract

This study quantifies the economic effects of two major immigration reforms aimed at legalizing undocumented individuals that entered the United States as children and completed high school: Deferred Action for Childhood Arrivals (DACA) and the DREAM Act. The former offers only temporary legal status to eligible individuals; the latter provides a track to legal permanent residence. Our analysis is based on a general-equilibrium model that allows for shifts in participation between work, college and non-employment. The model is calibrated to account for productivity differences across workers of different skills and documentation status, and a rich pattern of complementarities across different types of workers. We estimate DACA increased GDP by almost 0.02% (about $3.5 billion), or $7,454 per legalized worker. Passing the DREAM Act would increase GDP by around 0.08% (or $15.2 billion), which amounts to an average of $15,371 for each legalized worker. The larger effects of the DREAM Act stem from the expected larger take-up and the increased incentive to attend college among DREAMers with a high school degree. We also find substantial wage increases for individuals obtaining legal status, particularly for individuals that increase their educational attainment. Because of the small size of the DREAMer population, legalization entails negligible effects on the wages of US-born workers.

Suggested Citation

  • Ortega, Francesc & Edwards, Ryan & Hsin, Amy, 2018. "The Economic Effects of Providing Legal Status to DREAMers," IZA Discussion Papers 11281, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11281
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    References listed on IDEAS

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    1. Joël MACHADO, 2017. "Dealing with Undocumented Immigrants: The Welfare Effects of Amnesties and Deportations," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 83(4), pages 445-492, December.
    2. Monras, Joan & Vázquez-Grenno, Javier & Elias Moreno, Ferran, 2017. "Understanding the Effects of Legalizing Undocumented Immigrants," IZA Discussion Papers 10687, Institute of Labor Economics (IZA).
    3. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2013. "Does Employing Undocumented Workers Give Firms A Competitive Advantage?," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 158-170, February.
    4. Lozano, Fernando A. & Sorensen, Todd A., 2011. "The Labor Market Value to Legal Status," IZA Discussion Papers 5492, Institute of Labor Economics (IZA).
    5. Pope, Nolan G., 2016. "The Effects of DACAmentation: The Impact of Deferred Action for Childhood Arrivals on Unauthorized Immigrants," Journal of Public Economics, Elsevier, vol. 143(C), pages 98-114.
    6. Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2009. "Employer monopsony power in the labor market for undocumented workers," FRB Atlanta Working Paper 2009-14, Federal Reserve Bank of Atlanta.
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    Cited by:

    1. Amy Hsin & Francesc Ortega, 2018. "The Effects of Deferred Action for Childhood Arrivals on the Educational Outcomes of Undocumented Students," Demography, Springer;Population Association of America (PAA), vol. 55(4), pages 1487-1506, August.
    2. Giuntella, Osea & Lonsky, Jakub, 2018. "The Effects of DACA on Health Insurance, Access to Care, and Health Outcomes," IZA Discussion Papers 11469, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    immigration; DREAMers; legalization; undocumented;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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