Sanctions for Whom?

Peter Brownellbrownell@demog.berkeley.edu

UC Berkeley Sociology

The Immigration Reform and Control Act's "Employer Sanctions" Provisions and the Wages of Mexican Immigrants

Employer Sanctions History

1952 Texas Proviso1972 AFL-CIO & NAACP introduce

bill1982 GAO report1986 IRCA

IRCA

General AmnestySAW/H-2A Agricultural

ProgramsIncreased Border

EnforcementEmployer Sanctions

Employer Sanctions

Knowingly Hire/Continue to Employ

I-9 Verification/”Paperwork”Anti-discrimination

Discrimination

GAO Reports 1988, 1989, 1990 (Hiring)

Bansak & Raphael 2001 (Wages)

Legal Status & Wages

Pre-IRCA: No effect net of Human CapitalNorth & Houston 1975, Bailey 1985,

Chiswick 1988, Massey 1987, Borjas 1990

Post-IRCA: Significant effectDonato, Durand & Massey 1992, Donato &

Massey 1993, Phillips & Massey 1999

Interpretation

“(IRCA) represents an attempt to use labor market regulation to control illegal migration into the United States by imposing fines on employers who hire unauthorized workers. Sanctions lower wages directly because they act as a tax on hiring additional workers.”

Cobb-Clark, et al. 1995

Interpretation

“[IRCA] appears to have encouraged discrimination against undocumented migrants, with employers passing the costs and risks of unauthorized hiring on to the workers.”

Phillips and Massey 1999

An Unsatisfying Explanation?

“few civil or criminal fines had been assessed…”

“A low level of enforcement activity could lead many employers to discount the possibility that violations will be detected and punished, thus weakening the deterrent effect.”

Fix and Hill 1990

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Cases Completed Warnings Notice of Intent to Fine Final Orders

INS Sanctions Enforcement Activities FY1992-2003

Source: INS/OIS G23.19-G23.20 as of 10/2604

The Implications

If the decreased wages of unauthorized immigrants cannot be attributed to employers’ expected fines, then something in the post-IRCA era has lead to higher rates of profit for employing unauthorized immigrants.

Could IRCA have created incentives to hire unauthorized immigrants?

The Role of Verification

Data and Methods

CIS Sanctions database:“LYNX” closed cases through early

2000

Mexican Migration Project Survey:Male, Household Heads, US migrants

Preliminary Results

Controlling for Education and English Ability, unauthorized immigrants’ wages are not significantly different than legal immigrants prior to IRCA, but about 18% lower after IRCA.

Preliminary Results

Adding a measure of Expected fines, does not change this result, but implies wages about 14% less for every dollar of expected fines (for all immigrants)

Preliminary Results

Allowing the effect of fines to vary based on legal status does not change the post-IRCA unauthorized effect, but does show no significant effect of fines on legal immigrants, but show that unauthorized immigrants’ wages are approximately 27% lower for each dollar of expected fines.

Can Both Hypotheses be Correct?

Stable and robust post-IRCA status effect

Consistent with low enforcement

Future Directions

Broader MMP sampleEMIF dataNAWS dataEffects on migrant flows