Working Paper: NBER ID: w23236
Authors: George J. Borjas
Abstract: Over 11 million undocumented persons reside in the United States, and there has been a heated debate over the impact of legislative or executive efforts to regularize the status of this population. This paper examines the determinants of earnings for undocumented workers. Using newly developed methods that impute undocumented status for foreign-born persons sampled in microdata surveys, the study documents a number of 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. The relatively small magnitude of the current wage penalty suggests that a regularization program may only have a modest impact on the wage of undocumented workers.
Keywords: undocumented immigrants; earnings; wage penalty; labor market; regularization
JEL Codes: J31; J61; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| undocumented status (K37) | earnings of undocumented workers (K37) |
| age (J14) | earnings of undocumented workers (K37) |
| education (I29) | earnings of undocumented workers (K37) |
| state of residence (H73) | earnings of undocumented workers (K37) |
| undocumented status (K37) | wage gap with natives (J79) |
| observable socioeconomic characteristics (P36) | wage gap with natives (J79) |
| undocumented status (K37) | wage penalty (J31) |