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.