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Employer sanctions, and the welfare of native workers


  • Stark, Oded
  • Jakubek, Marcin


We investigate the impact of the imposition of sanctions for employing illegal migrants on the welfare of native workers. Our analysis is based on the premise that in response to such sanctions, managers in a firm may be reassigned from supervision of production to verification of the legality of the firm's workforce. When there is full employment in the host country, a profit-maximizing firm will assign managers to verification if the sanctions are steep enough. This reassignment impedes production efficiency and, consequently, leads to a reduction in the wages of both illegal migrants and native workers, inevitably hurting the latter, who are the intended beneficiaries of the sanctions.

Suggested Citation

  • Stark, Oded & Jakubek, Marcin, 2012. "Employer sanctions, and the welfare of native workers," University of Tuebingen Working Papers in Economics and Finance 38, University of Tuebingen, Faculty of Economics and Social Sciences.
  • Handle: RePEc:zbw:tuewef:38

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    References listed on IDEAS

    1. Cynthia Bansak, 2005. "The Differential Wage Impact of the Immigration Reform and Control Act on Latino Ethnic Subgroups," Social Science Quarterly, Southwestern Social Science Association, vol. 86(s1), pages 1279-1298.
    2. Cobb-Clark, Deborah A & Shiells, Clinton R & Lowell, B Lindsay, 1995. "Immigration Reform: The Effects of Employer Sanctions and Legalization on Wages," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 472-498, July.
    3. Hill, John K & Pearce, James E, 1990. "The Incidence of Sanctions against Employers of Illegal Aliens," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 28-44, February.
    4. 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.
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    Cited by:

    1. Pia Orrenius, 2013. "How Do Tougher Immigration Measures Affect Unauthorized Immigrants?: Comment," Demography, Springer;Population Association of America (PAA), vol. 50(3), pages 1101-1103, June.
    2. 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.
    3. Orrenius, Pia M. & Zavodny, Madeline, 2014. "How Do E-Verify Mandates Affect Unauthorized Immigrant Workers?," IZA Discussion Papers 7992, Institute for the Study of Labor (IZA).

    More about this item


    Employer sanctions; Illegal migrant workers; Natives' welfare; The formation of public policy;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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