The Impact of Legal Status on Immigrants’ Earnings and Human Capital: Evidence from the IRCA 1986

Abstract

The Immigration Reform and Control Act (IRCA), the largest amnesty in U.S. history, took effect in 1986 and legalized all immigrants who arrived before 1982. The IRCA creates a discontinuity, according to the year of entry, in the probability of having legal status. Therefore, I use the regression discontinuity approach to study the impact of legality on immigrants’ labor market outcomes and human capital. Using Californian Latino immigrants from Census 1990, I find that the 1975–81 arrivals, on average, outperform the 1982–86 arrivals in male wages, female employment probability, and male English-speaking ability. These findings are not due to a general trend in U.S. labor market conditions because the same analysis, using refugees, Puerto Rican migrants and U.S.-born Latinos—three comparison groups without legality issues—indicates no difference in outcomes between the 1975–81 and 1982–86 cohorts. However, the advantage of Latino immigrants of the earlier cohort over the later cohort diminishes in Census 2000.