Labor Economics 5th Edition by George Borjas

Exercise 7

The 1986 Immigration Reform and Control Act (IRCA) made it illegal for employers in the United States to knowingly hire illegal aliens. The legislation, however, has not reduced the flow of illegal aliens into the country. As a result, it has been proposed that the penalties against employers who break the law be substantially increased. Suppose that illegal aliens, who tend to be less skilled workers, are complements with native workers. What will happen to the wage of native workers if the penalties for hiring illegal aliens increase