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The Differential Wage Impact of the Immigration Reform and Control Act on Latino Ethnic Subgroups

Authors


  • *Direct correspondence to Cynthia Bansak, San Diego State University, Department of Economics, 5500 Campanile Dr., San Diego, CA 92182-4485〈cbansak@mail.sdsu.edu〉. Data and programs used to generate the results presented in the article are available on request. The author is grateful to three anonymous referees, Steven Raphael, Elizabeth Bass, Julian Betts, Wayne Cornelius, Chris Woodruff, Allan Zebedee, seminar participants at Emory University, and participants at the session on “Immigrants and Immigration Policy” at the 2002 MEA meetings for valuable comments on earlier versions of this article.

Abstract

Objective. This article tests whether employer sanctions for hiring undocumented workers, a provision of the 1986 Immigration Reform and Control Act (IRCA), adversely affected the hourly earnings of Latino workers.

Methods. Using the Current Population Survey Outgoing Rotation Group Files from 1983–1990, a natural experiment framework is developed to assess the differential wage impact of employer sanctions on Latino ethnic subgroups.

Results. Estimates of wage changes indicate that workers of Mexican descent saw a sizeable pre-post IRCA decline in their hourly earnings relative to Cuban or Puerto Rican workers. Moreover, this change in wages is not observed among non-Latino white workers. Controlling for the level of enforcement explains part of this decline immediately following the passage of IRCA, and enforcement efforts continue to be a significant factor several years later.

Conclusions. The majority of evidence is consistent with the contention that employer sanctions adversely affected the earnings of Mexican workers.

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