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Sanctions for Whom?

Sanctions for Whom?. The Immigration Reform and Control Act's "Employer Sanctions" Provisions and the Wages of Mexican Immigrants. Peter Brownell brownell@demog.berkeley.edu UC Berkeley Sociology. Employer Sanctions History. 1952 Texas Proviso 1972 AFL-CIO & NAACP introduce bill

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Sanctions for Whom?

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  1. Sanctions for Whom? The Immigration Reform and Control Act's "Employer Sanctions" Provisions and the Wages of Mexican Immigrants Peter Brownell brownell@demog.berkeley.edu UC Berkeley Sociology

  2. Employer Sanctions History • 1952 Texas Proviso • 1972 AFL-CIO & NAACP introduce bill • 1982 GAO report • 1986 IRCA

  3. IRCA • General Amnesty • SAW/H-2A Agricultural Programs • Increased Border Enforcement • Employer Sanctions

  4. Employer Sanctions • Knowingly Hire/Continue to Employ • I-9 Verification/”Paperwork” • Anti-discrimination

  5. Discrimination • GAO Reports 1988, 1989, 1990 (Hiring) • Bansak & Raphael 2001 (Wages)

  6. Legal Status & Wages • Pre-IRCA: No effect net of Human Capital • North & Houston 1975, Bailey 1985, Chiswick 1988, Massey 1987, Borjas 1990 • Post-IRCA: Significant effect • Donato, Durand & Massey 1992, Donato & Massey 1993, Phillips & Massey 1999

  7. 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

  8. 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

  9. 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

  10. INS Sanctions Enforcement Activities FY1992-2003 Source: INS/OIS G23.19-G23.20 as of 10/2604

  11. 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?

  12. The Role of Verification

  13. Data and Methods • CIS Sanctions database: • “LYNX” closed cases through early 2000 • Mexican Migration Project Survey: • Male, Household Heads, US migrants

  14. 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.

  15. 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)

  16. 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.

  17. Can Both Hypotheses be Correct? • Stable and robust post-IRCA status effect • Consistent with low enforcement

  18. Future Directions • Broader MMP sample • EMIF data • NAWS data • Effects on migrant flows

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