TY  - RPRT
        AU  - Schluter, Christian
AU  - Wahba, Jackline
        TI  - Illegal Migration, Wages, and Remittances: Semi-Parametric Estimation of Illegality Effects
        PY  - 2009/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 4527
        UR  - https://www.iza.org/publications/dp4527
        AB  - We consider the issue of illegal migration from Mexico to the US, and examine whether the lack of legal status causally impacts on outcomes, specifically wages and remitting behavior. These outcomes are of particular interest given the extent of legal and illegal migration, and the resulting financial flows. We formalize this question and highlight the principal empirical problem using a potential outcome framework with endogenous selection. The selection bias is captured by a control function, which is estimated non-parametrically. The framework for remitting is extended to allow for endogenous regressors (e.g. wages). We propose a new re-parametrisation of the control function, which is linear in case of a normal error structure, and test linearity. Using Mexican Migration project data, we find considerable and robust illegality effects on wages, the penalty being about 12% in the 1980s and 22% in the 1990s. For the latter period, the selection bias is not created by a normal error structure; wrongly imposing normality overestimates the illegality effect on wages by 50%, while wrongly ignoring selection leads to a 50% underestimate. In contrast to these wage penalties, legal status appears to have mixed effects on remitting behavior.
        KW  - non-parametric estimation
KW  - control functions
KW  - selection
KW  - counterfactuals
KW  - illegality effects
KW  - illegal migration
KW  - intermediate outcomes
KW  - Mexican Migration Project
        ER  -