Employment of Undocumented Immigrants

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.

It is really easy to illustrate just how striking the evidence is. Here is the graph showing the age/employment profile for natives, legal immigrants, and undocumented immigrants:

And here  is the graph that shows the divergence in employment rates across the groups over the past two decades:

And here are some labor supply curves. The top one is for natives, and the bottom one is for undocumented immigrants. The labor supply curve of natives has a nice upward slope, while the labor supply curve of undocumented immigrants is essentially flat, so that the labor supply elasticity is very close to zero. (The slope of the corresponding labor supply curve for legal immigrants lies in between these two extremes)

(For the geeks: Each point in these scatter diagrams gives the average annual hours of work and average hourly wage for a particular education-age-year cell over the 1994-2014 period).

Yup. It sure looks as if most undocumented men come to the United States to work.