Three Essays on Illegal Immigration

This dissertation consists of three essays studying illegal immigration in the United States. In the first chapter I extend the standard Mortensen-Pissarides labor market model to study the effect of two immigration policies, an amnesty and tighter border enforcement, on the wages and unemployment rates of US natives and Mexican immigrants. A key finding of this paper is that natives might benefit from the presence of illegal workers in the economy. The presence of illegal workers increases firms' incentives to open vacancies, which increases the wages of natives and decreases their unemployment rate. Moreover, this paper also shows that the effect of border enforcement on the number of illegal workers in the US is ambiguous. Tighter border enforcement deters illegal migration of prospective workers, but decreases return migration.In the second chapter I estimate the effect of legal status on the wages of immigrants using Mexico's Survey of Migration to the Northern Border. I control for possible selection biases and test for selectivity in the population obtaining legal status. The analysis shows that legal workers earn higher wages than illegal workers, especially those working in the production and services sectors. Moreover, within sectors the wage gap varies by occupation, and is larger among individuals working in formal jobs. The results show that once we control for observable characteristics, there is no evidence of selectivity among Mexican workers obtaining legal status.In the third chapter I study return migration and test Borjas and Bratsberg's (1996) prediction that the return migration process further accentuates the type of selection observed among immigrants moving from Mexico to the US. I use data from the Survey of Migration to the Northern Border together with a selection model to infer the unobservable skills of Mexican immigrants and the unexpected component of their earnings in the US. The results show that immigrants are negatively selected relative to the Mexican population. Consistent with Borjas and Bratsberg's prediction, return migrants are relatively more skilled than the typical immigrant. Moreover, workers who face more negative unexpected conditions in the US are those who find it optimal to return to Mexico