Employer Monopsony Power in the Labor Market for Undocumented Workers

Using matched employer-employee data from the state of Georgia, this paper investigates the potential for employer monopsony power in the labor market for undocumented workers. Undocumented workers are found to be about 40 percent less sensitive as documented workers to their employers' wage adjustments. This difference in labor supply elasticities accounts for about 30 percent of the observed within-firm wage differential between documented and undocumented workers. There is no statistically significant evidence of displacement of documented workers as more undocumented workers are hired