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.



Author: George Borjas

I am a Professor of Economics and Social Policy at the Harvard Kennedy School.