Immigrants who get amnesty earn more money

April 24, 1997

ANN ARBOR—Having a green card not only gives immigrants in the United States legal benefits associated with permanent residency, it also means more greenbacks in their pockets, a new University of Michigan study shows.

According to Sherrie A. Kossoudji, U-M associate professor of social work and economics, and economist Deborah A. Cobb-Clark of the Australian National University, unauthorized workers who were granted amnesty under the 1986 Immigration Reform and Control Act (IRCA) earned, on average, 14.3 percent higher real wages after becoming legal immigrants.

In their study of nearly 1,400 Mexican and Central American men who illegally entered the United States between 1975 and 1982 but were granted permanent resident status after IRCA, Kossoudji and Cobb-Clark found that increases in the men’s wages after amnesty were due primarily to their newly legalized status, not because of an improved national economy.

“It was believed that legalization would bring these workers ‘out of the shadows,’ reducing employers’ ability to exploit them and improving their U.S. labor market opportunities,” Kossoudji says. “In this sense, at least, Congress’ policy experiment does appear to have led to a beneficial change. Our analysis provides evidence that wage determinants are structurally different for legalized workers after amnesty.”

The amnestied men, the researchers say, now benefit from the same factors that determine wages for other legal workers, such as educational background, English proficiency and labor market mobility. No longer are the newly legalized immigrants at the mercy of exploitative employers or under the constant threat of discovery by the Immigration and Naturalization Service (INS), they add.

“Changes in the wage-generating process after legalization are consistent with increased labor market mobility and a formalization of employment relations,” Kossoudji says. “Education now plays a more established role in wage determination.

“This is not likely to result from a sudden change in the way in which employers value the human capital of their workers. Instead, the freedom to be mobile after legalization allows workers to maximize the return to their existing human capital.”

In comparing amnestied workers with a sample of about 800 young Hispanic men (U.S. citizens and legal immigrants), the study found that between the time of receiving amnesty and 1992, the annual wage growth rate for the newly legalized workers was 3.2 percent, while wages increased just 1.8 percent per year for the comparison group. In the pre-amnesty period, the corresponding annual rates were 2.2 percent for the then-unauthorized amnestied workers and 6.6 percent for the comparison group of legal workers.

“This difference between the results for unauthorized and legal workers suggests that legal status, and not simply the timing of the data or macroeconomic conditions, spurred a significant change in the wage-generating process for the legalized population,” Kossoudji says.

Although the newly legalized workers posted larger income gains than the comparison group during the post-amnesty period, the researchers say that they are still three times as likely to hold traditional migrant jobs as farm workers, groundskeepers, janitors, laborers, cooks and machine operators.

Because these wage gains come relatively late in their careers (compared with other legal workers who invest in education and job training early on), the amnestied workers continue to earn lower wages—as much as 21 percent less—than if they had never been unauthorized in the first place.

The study will be presented at the annual conference of the Society of Labor Economists next week in Washington, D.C.

Phone: (313) 647-1847

Sherrie A. Kossoudji