Immigration reform and the earnings of Latino workers: Do employer sanctions cause discrimination

Using the Current Population Surveys, the authors investigate whether sanct ions against employers for hiring undocumented workers, a provision of the 1986 Immigration Reform and Control Act (IRCA), adversely affected the hour ly earnings of Latino workers in the southwestern United States. The analys is exploits the fact that agricultural employers were exempt from the sanct ions and from employee-verification requirements for the first two years fo llowing IRCA's passage. The authors find substantial pre-post IRCA declines in the wages of Latino nonagricultural workers relative to Latinos in agri culture. They do not observe similar shifts in the relative wages among non -Latino white workers. When using non-Latino black and white non-agricultur al workers as alternative control groups, they find that Latino wages decli ned relative to black wages but not relative to white wages. Finally, they find that the pre-post IRCA inter-sectoral and inter-ethnic relative wage d eclines for Latino non-agricultural workers do not reflect longer-term tren ds.