Unlocking Occupational Opportunity: The Labor Market Effects of DACA

U.S. laws make it illegal for employers to knowingly hire undocumented migrants. This legal constraint affects which firms will employ unauthorized workers and what jobs undocumented migrants can expect to get. As a result, unauthorized migrants are more likely to end up in jobs that have a lower risk of detection of immigration status and are less desirable. The Deferred Action for Childhood Arrivals (DACA) policy, which began in August 2012, gave temporary legal authorization to work in the U.S. to a subset of undocumented migrants – those who arrived in the U.S. as children meeting certain other eligibility criteria. In this paper, we use a difference-in-differences strategy to estimate the effect of DACA on the occupational outcomes of young adults who arrived in the U.S. as children. Applying this strategy to individual-level data from the American Community Survey, we find that DACA eligibility decreases the likelihood that noncitizen childhood immigrants hold traditional immigrant jobs or jobs with a high risk of injury, and increases the likelihood of holding a government job or jobs that require occupational licensing. On the whole, DACA eligibility shifts noncitizen childhood immigrants to occupations that are higher-paying and employ more educated workers. These findings are consistent with legal barriers constraining undocumented childhood migrants from taking the jobs they are interested in and have the skills for. These workers are shunted to jobs they find less desirable and there are societal losses from the misallocation of talent.