Coming Out of the Shadows: Learning About Legal Status and Wages from the Legalized Population

35 Pages Posted: 14 Jun 1999

See all articles by Sherrie A. Kossoudji

Sherrie A. Kossoudji

University of Michigan at Ann Arbor - Department of Economics; IZA Institute of Labor Economics

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Date Written: October 1998

Abstract

In 1986, Congress passed the Immigration Reform and Control Act (IRCA) to reduce the incentives for unauthorized migration by eliminating U.S. employment opportunities for unauthorized workers. The General Legalization Program within IRCA granted amnesty to approximately 1.7 million long-term unauthorized workers to bring them "out of the shadows" and improve their labor market opportunities. An analysis of wages using panel data for a sample of legalized men provides evidence that wage determinants are structurally different after amnesty for them, but not for the comparison group measured during the same time periods. This suggests that changes are due to legalization rather than differences in macroeconomic conditions. These changes result from altered returns to human capital and continuing penalties for those who work in traditional migrant jobs. The penalty for being unauthorized begins with low entry wages and is compounded by slow wage growth during the unauthorized era. Legalized men experienced rapid wage growth after legalization. Benchmark estimates of the penalty to being unauthorized range from 14 percent to 24 percent. The wage benefit of legalization under IRCA was approximately 6 percent by 1992.

JEL Classification: J31, J61, J30

Suggested Citation

Kossoudji, Sherrie A. and Cobb-Clark, Deborah A., Coming Out of the Shadows: Learning About Legal Status and Wages from the Legalized Population (October 1998). Available at SSRN: https://ssrn.com/abstract=166535 or http://dx.doi.org/10.2139/ssrn.166535

Sherrie A. Kossoudji

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Deborah A. Cobb-Clark (Contact Author)

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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