The Effect of Legal Status on Immigrant Wages and Occupational Skills

Native and foreign-born workers with a high school degree or less educational attainment provide unique occupational skills to the US labor force. This regularity might be driven, in part, by limited access to occupations for immigrants lacking legal rights to work in the US. This paper exploits exogenous policy change induced by the 1986 Immigration Reform and Control Act (IRCA) to perform triple-difference estimation examining whether legal status causes immigrants to work in occupations that use skills more similar to those of native-born workers. We find that legal status decreases the manual skill intensity of Mexican immigrants by two percentiles. It increases communication skill intensity by an equivalent amount. This effect reduces the skill gap between Mexican-born and native-born American workers by 13%