May 16, 2012

Does Employing Undocumented Workers Give Firms a Competitive Advantage?

Using administrative data from the state of Georgia, this paper finds that on average, among all firms, employing undocumented workers reduces a firm’s hazard of exit by 19 percent. However, the impact varies greatly across sectors. In addition, a firm is at a distinct disadvantage if it does not employ undocumented workers but its rivals do. The advantage to employing undocumented workers increases as more firms in the industry do so. In addition, the advantage to a firm from employing undocumented workers decreases with the skill level of the firm’s workers, increases with the breadth of a firm’s market, and increases with the labor intensity of the firm’s production process.
That is from the paper "Does Employing Undocumented Workers Give Firms a Competitive Advantage?" by Brown, Hotchkiss, and Quispe-Agnoli (February 2012).
A graph from the paper:

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