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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.

Suggested Citation

  • C. Bansak & S. Raphael, "undated". "Immigration Reform and the Earnings of Latino Workers: Do Employer Sanctions Cause Discrimination?," Institute for Research on Poverty Discussion Papers 1181-98, University of Wisconsin Institute for Research on Poverty.
  • Handle: RePEc:wop:wispod:1181-98
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    File URL: http://www.irp.wisc.edu/publications/dps/pdfs/dp118198.pdf
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    References listed on IDEAS

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    1. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-333, April.
    2. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    3. B. Lowell & Jay Teachman & Zhongren Jing, 1995. "Unintended consequences of Immigration Reform: Discrimination and hispanic employment," Demography, Springer;Population Association of America (PAA), vol. 32(4), pages 617-628, November.
    4. 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 674-683, June.
    5. repec:cdl:ucsbec:12-98 is not listed on IDEAS
    6. 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 1333-1381, September.
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    Cited by:

    1. Sarah Bohn & Magnus Lofstrom & Steven Raphael, 2014. "Did the 2007 Legal Arizona Workers Act Reduce the State's Unauthorized Immigrant Population?," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 258-269, May.
    2. Orrenius, Pia M. & Zavodny, Madeline, 2001. "Do amnesty programs encourage illegal immigration? evidence from IRCA," Working Papers 0103, Federal Reserve Bank of Dallas.
    3. Cynthia Bansak, 2016. "Legalizing undocumented immigrants," IZA World of Labor, Institute for the Study of Labor (IZA), pages 245-245, March.
    4. Mark Hoekstra & Sandra Orozco-Aleman, 2017. "Illegal Immigration, State Law, and Deterrence," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 228-252, May.
    5. Giorgio Pietro, 2013. "Military conscription and university enrolment: evidence from Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 619-644, April.
    6. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
    7. Pia M. Orrenius & Madeline Zavodny, 2001. "Do amnesty programs encourage illegal immigration? Evidence from the Immigration Reform and Control Act (IRCA)," FRB Atlanta Working Paper 2001-19, Federal Reserve Bank of Atlanta.
    8. Catalina Amuedo-Dorantes & Fernando Lozano, 2015. "On The Effectiveness Of Sb1070 In Arizona," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 335-351, January.
    9. Orrenius, Pia M. & Zavodny, Madeline, 2005. "Did 9/11 worsen the job prospects of Hispanic immigrants?," Working Papers 0508, Federal Reserve Bank of Dallas.
    10. Catalina Amuedo-Dorantes & Cynthia Bansak, 2014. "Employment Verification Mandates And The Labor Market Outcomes Of Likely Unauthorized And Native Workers," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 671-680, July.
    11. Sherrie A. Kossoudji & Deborah A. Cobb-Clark, 2002. "Coming out of the Shadows: Learning about Legal Status and Wages from the Legalized Population," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 598-628, July.
    12. Pia M. Orrenius & Madeline Zavodny, 2004. "What are the consequences of an amnesty for undocumented immigrants?," FRB Atlanta Working Paper 2004-10, Federal Reserve Bank of Atlanta.
    13. Julie Phillips & Douglas Massey, 1999. "The new labor market: Immigrants and wages after IRCA," Demography, Springer;Population Association of America (PAA), vol. 36(2), pages 233-246, May.
    14. Sarah Bohn & Magnus Lofstrom & Steven Raphael, 2015. "Do E-verify mandates improve labor market outcomes of low-skilled native and legal immigrant workers?," Southern Economic Journal, Southern Economic Association, vol. 81(4), pages 960-979, April.
    15. Amuedo-Dorantes, Catalina & Bansak, Cynthia, 2011. "The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey," IZA Discussion Papers 5576, Institute for the Study of Labor (IZA).
    16. 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).
    17. Neeraj Kaushal, 2006. "Amnesty Programs and the Labor Market Outcomes of Undocumented Workers," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
    18. 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).
    19. Pia Orrenius & Madeline Zavodny, 2003. "Do amnesty programs reduce undocumented immigration? Evidence from Irca," Demography, Springer;Population Association of America (PAA), vol. 40(3), pages 437-450, August.
    20. 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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