The Impact of Employer Sanctions on Metropolitan Wage Rates

This article explores the labor market effects of the employer sanctions provisions of the 1986 Immigration Reform and Control Act (IRCA). These provisions levy a “paperwork fine” on all employers who fail to screen each new worker for work‐authorized status, as well as a “hiring fine” on employers who knowingly hire unauthorized workers. Using administrative data, we extend prior research and examine the impact of each type of fine on metropolitan wages in thirteen nonagricultural industries. Although government enforcement has been modest, we find that these fines have a statistically significant, although correspondingly modest, effect on earnings: expected paperwork fines lower average wages, while expected hiring fines raise wages.