Does stricter immigration enforcement raise wages? Starting in the mid-2000s, several U.S. state and local governments tightened controls on unauthorized immigration, increasing the risk of detention and deportation, and imposing sanctions on employers and landlords. These policies reduce immigrant population, but evidence of their wage impact is mixed. Low or declining wages may have motivated some of these policies, complicating assessment of their wage impacts. I use local sentiment towards immigrants, as measured by the volume of internet searches using opinion-loaded language about immigration, as an instrumental variable driving anti-immigrant policies. I find that restrictive immigration policies cause a significant decline in both immigrant and native wages. I use a structural labor demand model to distinguish between two underlying explanations. First, similarly-skilled immigrant and native workers are imperfect substitutes, and those with more disparate skills are complements. These relationships attenuate or reverse upward pressure on native wages from the reduced supply of immigrants. Second, the policies cause a decline in the productivity of labor, especially for immigrants, but also for natives. For immigrants, this result is expected; stricter immigration enforcement is known to adversely affect immigrant health and other measures of well-being. The policies also may impose a cost on firms through additional background checks, employee turnover, and search costs. More surprising is the decline in native productivity, which indicates that some natives suffer from the same individual consequences that affect immigrants, and that the costs on firms also may apply to the employment of natives.
Several recent studies have found immigrant and native workers with similar education and experience to be imperfect substitutes in the labor market. This indirect competition contributes to the common empirical finding that immigration has little impact on native wages. It stands to reason that an immigrant's authorization status plays a large role in determining whom they actually compete for jobs. I utilize a cross-survey multiple-imputation method recently developed by demographers to identify unauthorized immigrants in the American Community Survey, based on the response of similar individuals to immigration status questions in the smaller Survey of Income and Program Participation. I demonstrate that authorized and unauthorized immigrants are imperfect substitutes. For the the college-educated, the degree of imperfect substitution is severe enough to suggest that authorized and unauthorized workers may compete more closely with other groups than with each other, consistent with occupational downgrading by the college-educated unauthorized. Studies that group all college-educated immigrants together are likely to underestimate the true impact of high-skilled immigration on college-educated native wages, because they have exaggerated the number of competing immigrants. On the other hand, the same studies may overestimate the effect of immigration on lower-skill native wages, because they understate the number of immigrants working in lower-skilled jobs.
Deferred Action for Childhood Arrivals is a U.S. policy that allows some unauthorized immigrants who entered the country as children to remain on a renewable two-year basis, and to receive a permit of work eligibility. Evidence on the effect of DACA on educational outcomes has been mixed. Early work on those who were already adults at the time DACA was implemented found that DACA eligibility reduced college enrollment, as many recipients entered the labor force; more recent work on younger recipients has found DACA eligiblity to yield improved educational outcomes. This paper explores whether the duration of exposure to DACA in adolescence increases the educational gains from the program. If DACA increases the return to schooling, incentivizing educational investment, then those who were younger when DACA was implemented would have had more time to react and make those investments. Those exposed to DACA since early adolescence have just recently reached college and working age, allowing comparison of the educational impact of DACA eligibility by age cohort.