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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.

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Paper provided by University of Tuebingen, Faculty of Economics and Social Sciences in its series University of Tuebingen Working Papers in Economics and Finance with number 38.

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Date of creation: 2012
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Handle: RePEc:zbw:tuewef:38
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  1. 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.
  2. 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.
  3. 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 472-98, July.
  4. B. Lowell & Jay Teachman & Zhongren Jing, 1995. "Unintended consequences of Immigration Reform: Discrimination and hispanic employment," Demography, Springer, vol. 32(4), pages 617-628, November.
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