Earnings of Undocumented Immigrants

I have a new paper that looks at how undocumented workers perform in the U.S. labor market. Here are some of the main findings:

First, the age-earnings profile of undocumented workers lies far below that of legal immigrants and of native workers, and is almost perfectly flat during the prime working years. Second, the unadjusted gap in the log hourly wage between undocumented workers and natives is very large (around 40 percent), but half of this gap disappears once the calculation adjusts for differences in observable socioeconomic characteristics, particularly educational attainment. Finally, the adjusted wage of undocumented workers rose rapidly in the past decade. As a result, there was a large decline in the wage penalty associated with undocumented status.

It is this last result that I find particularly intriguing. Define the “wage penalty” to undocumented status as the difference in wages between observationally equivalent legal and undocumented immigrants. Here’s the graph that illustrates just how noticeable the decline in the wage penalty has been:

Wage Penalty

As I conclude in the paper, as long as we take these trends at face value, it seems that “a regularization program may only have a modest impact on the wage of undocumented workers.”

This paper is a follow-up to my earlier work on the labor supply of undocumented immigrants, which showed that undocumented men have very high labor force participation rates and inelastic labor supply. That paper is now finished and forthcoming in Labour Economics. Click here if you’d like to access the code that I used to conduct the calculations reported in that paper, including the code that imputes undocumented status in the post-1994 Current Population Surveys. As soon as I have a little extra time (we’re in the midst of downsizing and moving), I’ll clean up and post the code for the new paper as well.



Immigration And Poverty: Updated Facts

Last year, I published this paper discussing the link between immigrant poverty and the 1996 welfare reform legislation. It showed that although the legislation cut the number of immigrants receiving assistance, their poverty rate actually fell. Many of the affected immigrants resorted to good, old-fashioned employment as a means of support.

There have been some rumblings recently about how those results translate in today’s immigration debate. Although the paper was published last year, I actually wrote it years ago, focusing on the period around welfare reform and examining data through 2001. But then I got sidetracked into various other things. (FYI: there are two or three other papers in my computer hard drive awaiting resurrection in the same way).

The current discussion sparked my curiosity: What do immigrant poverty rates look like now?


So I took out the Current Population Survey (CPS) data from 1994 to 2016, the period over which this exercise can actually be done, and proceeded to calculate the poverty rate of immigrants aged 20+. I dropped the children to avoid the complication of whether the US-born children of immigrants should be counted as “immigrants” or “natives.” In any case, a few minutes later I ended up with the graph above.

It is easy to see the post-1996 decline in poverty rates that motivated my paper. But it is also easy to see the very adverse impact that the Great Recession seems to have had on immigrant poverty. Their poverty rates rose substantially, from 14.1 percent in 2007 to 18.7 percent in 2011. The increase was much smaller for natives, from 9.7 to 11.5 percent. It is also interesting that the economic recovery reduced poverty rates much more for immigrants than for natives. I am sure there’s a paper waiting to be written that explains the “excess sensitivity” of immigrant poverty rates to outside shocks.

A number of readers have indicated they like these types of fact-based blog posts, where I use available data to easily compute relevant statistics. So I’m creating a new tag for this type of post simply called “Factoids,” and I’ll try to go back in the archives and recategorize past posts. And for the true geeks, the STATA code that creates the graph is, as they used to say, below the fold.

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