Immigration Reform and the Earnings of Latino Workers: Do Employer Sanctions Cause Discrimination?

UCSD Economics Discussion Paper No. 98-20

43 Pages Posted: 17 Mar 1999

See all articles by Cynthia Bansak

Cynthia Bansak

Saint Lawrence University - Department of Economics

Steven P. Raphael

University of California, Berkeley

Date Written: August 1998

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 U.S. 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 two years after their imposition on non-agricultural employers. Hence, Latino agricultural workers provide a control group against which to compare changes in the wages of Latinos in non-agricultural employment. We find substantial pre-post IRCA declines in the hourly earnings of Latino non-agricultural workers relative to Latinos in agriculture. This pattern, however, is considerably stronger for Latino men than Latina women. We do not observe similar inter-sectoral 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 non-agricultural wages reverses the pre-IRCA trend, where we observe the relative earnings of Latino non-agricultural workers increasing.

JEL Classification: F22, J15, J71

Suggested Citation

Bansak, Cynthia and Raphael, Steven P., Immigration Reform and the Earnings of Latino Workers: Do Employer Sanctions Cause Discrimination? (August 1998). UCSD Economics Discussion Paper No. 98-20, Available at SSRN: https://ssrn.com/abstract=145791 or http://dx.doi.org/10.2139/ssrn.145791

Cynthia Bansak

Saint Lawrence University - Department of Economics ( email )

One Romoda Drive
Canton, NY 13617
United States

Steven P. Raphael (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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