Undocumented worker employment and firm survival

Arbeitspapier

Do firms employing undocumented workers have a competitive advantage? Using administrative data from the state of Georgia, this paper investigates the incidence of undocumented worker employment across firms and how it affects firm survival. Firms are found to engage in herding behavior, being more likely to employ undocumented workers if competitors do. Rivals' undocumented employment harms firms' ability to survive, while firms' own undocumented employment strongly enhances their survival prospects. This suggests that firms enjoy cost savings from employing lower-paid undocumented workers at wages less than their marginal revenue product. The herding behavior and competitive effects are found to be much weaker in geographically broad product markets, where firms have the option to shift labor-intensive production out of state or abroad.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3936

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Geographic Labor Mobility; Immigrant Workers
• Subject: Undocumented workers ; firm dynamics ; monopsony ; immigration policy ; Schwarzarbeit ; Internationale Arbeitsmobilität ; Illegale Einwanderung ; Wettbewerbsvorteil ; Wettbewerbsstrategie ; Herdenverhalten ; Theorie ; Schätzung

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brown, J. David ; Hotchkiss, Julie L. ; Quispe-Agnoli, Myriam
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35372
• URN: urn:nbn:de:101:1-2009020963
• Last update: 10.03.2025, 11:44 AM CET