Employer sanctions on hiring illegal labor: An experimental analysis of firm compliance

Research output: Contribution to journalArticle

Abstract

The employer sanctions provision of the 1986 Immigration Reform and Control Act penalizes employers who knowingly hire unauthorized workers. Under IRCA, employers are subject to civil and/or criminal penalties; however, given the widespread availability of counterfeit documentation, in some cases it becomes difficult to discern the employment eligibility status of some workers. Using experimental methods, this study provides some evidence that marginal increases in employer compliance rates are significantly higher when employers have perfect information on the employment eligibility status of its potential workers than when they do not. The experimental results suggest that increases in government spending for employer sanctions enforcement may be more effective if the informational asymmetry faced by employers is solved first. A possible solution to this problem may lie in the adoption of tamper-proof documentation such as a national identification card.

Original languageEnglish (US)
Pages (from-to)87-100
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume34
Issue number1
DOIs
StatePublished - Jan 1 1998

Keywords

  • Asymmetric and private information
  • C91
  • D82
  • Experimental economics
  • Illegal behavior and the enforcement of law
  • K42

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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