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:
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.
Some people have asked me what I thought of the actions against illegal immigration that President Trump announced yesterday. As far as I can tell, he did exactly what he promised he was going to do, so there were few surprises in terms of what was going to happen.
But along the way, the President did something else that really struck me: he forced a much-needed late-course correction in the media narrative. Practically every story about illegal immigration in the MSM tells of immigrants who overcome incredible hardships and make an amazing contribution to American life (how many times have we read about the illegal children who end up going to Ivy League colleges), or they describe the suffering that immigrant families endure when immigration enforcement breaks up the family unit.
These stories are real, and are definitely part of what we should be considering when we think about illegal immigration. But there are other stories to be told, stories that don’t fit in with the narrative. Some illegal immigrants commit crimes, and natives have been harmed; some drive cars under the influence and natives sometimes end up getting hurt; and some native families have suffered a great personal loss, a different type of family separation due to (the lack of) immigration enforcement. For the most part, the MSM has made sure that these stories are hidden away, never to be acknowledged or discussed in polite discussions of illegal immigration. I’ve seldom learned about these cases from CNN, the Washington Post, or the New York Times.
President Trump specifically emphasized that other side of illegal immigration yesterday. Not only did he personally call out some of those families that have suffered irreparable harm from illegal immigration, but it seems that there will now be a weekly report of criminal acts by illegal immigrants. Needless to say, that listing would never have been prepared under the old regime. Regardless of where one stands on illegal immigration, it is hard to argue against the fact that more information about the issue is far better than the one-sided-stories the MSM has been feeding us for years.
Although there have been many attempts to regularize the status of the 11 million undocumented persons in the country, it is difficult to predict the economic impact of such regularization. The reason is simple: We know very little about the socioeconomic characteristics of undocumented persons.
I got curious about this a couple of years ago. The Pew Research Center has done a lot of work trying to impute an undocumented status variable for each individual in micro data such as the ACS and the CPS. They generously gave me access to some of their data and I’ve applied the method to the entire post-1994 CPS time series. My initial paper using these data looks at labor supply. One often hears that most undocumented immigrants come to the United States to work. It turns out that the claim is true, at least for men. Here is a summary of the key conclusions:
This paper provides a comprehensive empirical study of the labor supply behavior of undocumented immigrants in the United States. Using newly developed methods that attempt to identify undocumented status for foreign-born persons sampled in the Current Population Surveys, the empirical analysis documents a number of findings, including the fact that the work propensity of undocumented men is much larger than that of other groups in the population; that this gap has grown over the past two decades; and that the labor supply elasticity of undocumented men is very close to zero, suggesting that their labor supply is almost perfectly inelastic.
Continue reading “Employment of Undocumented Immigrants”