| Abstract: | 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. |
