Does Employing Undocumented Workers Give Firms a Competitive Advantage?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Abstract: Using administrative data from the state of Georgia, this paper finds that, on average, across all firms, employing undocumented workers reduces a firm's hazard of exit by 19 percent. The advantage to firms from employing undocumented workers increases as more firms in the industry do so, decreases with the skill level of the firm's workers, increases with the breadth of a firm's market, and increases with the labor intensity of the firm's production process. Terms of use: Documents inJEL classification: J15, C41, J42

Unemployment among Mexican immigrant men in the United States, 2003–2012

“…First, firms that employ migrant workers can gain a competitive advantage because migrants have lower reservation wages. Brown et al (2012) find that employing unauthorized workers increases a firm’s survival rate by 19%. Second, unauthorized migrant workers have no legal standing should they desire to protest work conditions.…”

Undocumented Workers' Employment Across U.S. Business Cycles

“…On average, undocumented workers are likely to have been on their current job a shorter amount of time, have less labor market experience, and reflect greater separation behavior (not holding anything else constant). In addition, undocumented workers appear to be concentrated among employers that experience a greater degree of churning of the workforce, suggesting a need for workforce flexibility in its production process (see Brown, Hotchkiss, and Quispe‐Agnoli 2013; Morales 1983).…”

The Expected Impact of State Immigration Legislation on Labor Market Outcomes

“…DeFreitas () and Hotchkiss, Quispe‐Agnoli, and Rios‐Avila () investigate the wage impact of the presence of undocumented workers, finding only modest impacts that vary across worker skill level and across sectors. Brown, Hotchkiss, and Quispe‐Agnoli () present evidence that employing undocumented workers gives firms a competitive advantage, suggesting that the lower wages paid to undocumented workers likely derives from firms taking advantage of the workers' limited job opportunities and mobility, rather than reflecting merely lower productivity of the workers. And this is where the concern lies.…”