Policies to Curb Unauthorized Employment

Illegal immigration is possible in large part because of illegal employment. Employers use unauthorized workers not just because they are willing to accept lower wages; illegal hiring can enable employers to evade costly regulations and taxes, and to enjoy greater flexibility in working hours and employment length. The underlying drivers of illegal hiring vary based on the type of employer, the nature of the industry, state of the economy, and a country’s labor market institutions, employment legislation, immigration systems, and even culture.

Policymakers crafting a coherent strategy to reduce illegal employment can rely on three major lines of attack. First, employer sanctions aim to raise the cost of hiring illegally. Effectively implementing sanctions requires reliable mechanisms to verify workers’ employment status and prove that employers knowingly hired an unauthorized worker, and a strategy to make the most of limited resources, including by targeting law enforcement efforts at high-risk employers or industries. Second, simplifying and easing access to legal visas for less-skilled migrants and employers can address this problem but must be balanced against the desire to moderate the inflow of these types of workers. Finally, domestic labor market reforms to increase labor participation, tackle the incentives for informal working, and reduce labor standards violations represent more ambitious policies with the potential to address some of the underlying causes of illegal employment.