Comparing Wage Gains from Small and Mass Scale Immigrant Legalization Programs

Large-scale immigrant legalization programs (such as the 1986 Immigration Reform and Control Act or the IRCA) may produce supply shocks that may affect wages of newly legalized immigrants. The effect of supply shock may be especially relevant given that certain occupations have a high density undocumented immigrants. Thus comparing the legalization premium for those who were legalized based on family ties or small-scale legalization programs, to the legalization premium from the IRCA may provide an estimate about the importance of labor supply shock. It may also provide an estimate of the long-term wage gain (as the supply shock of any large-scale amnesty program dissipates) from large-scale legalization programs.We use data from the New Immigrant Survey (NIS) for data on immigrants who were legalized based on family ties or small-scale legalization programs, and the Legalized Population Survey (LPS) for data on immigrants legalized by the IRCA. Estimates suggest that the increase in wage after legalization is about 22% higher for male immigrants who were legalized based on family ties, or smaller scale legalization programs, compared to IRCA beneficiaries. Difference-in-Difference-Difference regressions with National Longitudinal Survey of Youth (1979 cohort and 1997 cohort) comparison groups suggest similar results. We further show that the NIS respondents received a larger wage gain from legalization compared to the LPS respondents even though they had similar wages in their first U.S. job. This suggests that supply shock brought on by the IRCA restricted the wage gains of IRCA beneficiaries