Unintended consequences of immigration reform: discrimination and Hispanic employment

The record-keeping requirements of the Immigration Reform and Control Act(IRCA), and fines for illegal employment, may induce employers to discriminate against foreign-appearing workers. The General Accounting Office (GAO) reported widespread IRCA-related discrimination but did not link reported discriminatory practices to discriminatory employment behavior. We analyze the GAO's random survey and, controlling for selectivity effects, demonstrate that employers who report discriminatory practices actually employ fewer Hispanics. Although the measured reduction of Hispanic employment due to IRCA is fairly small, this finding parallels research alerting us to adverse consequences of a law that so far has achieved few of its intended effects.