Does Employing Undocumented Workers Give Firms a Competitive Advantage?
Heriot-Watt University - Centre for Economic Reform and Transformation (CERT)
Julie L. Hotchkiss
Federal Reserve Bank of Atlanta; Georgia State University - Department of Economics
Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper Series No. 2012-02
Using administrative data from the state of Georgia, this paper finds that on average, among all firms, employing undocumented workers reduces a firm's hazard of exit by 19 percent. However, the impact varies greatly across sectors. In addition, a firm is at a distinct disadvantage if it does not employ undocumented workers but its rivals do. The advantage to employing undocumented workers increases as more firms in the industry do so. In addition, the advantage to a firm from employing undocumented workers decreases with the skill level of the firm's workers, increases with the breadth of a firm's market, and increases with the labor intensity of the firm's production process.
Number of Pages in PDF File: 60
Keywords: firm survival, illegal immigrants, hazard rates, survival analysis
JEL Classification: J15, C41, J42working papers series
Date posted: May 16, 2012
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