The effect of mass legalization on US state-level institutions: Evidence from the immigration reform and control act

A new case for immigration restrictions argues that migrants may transmit low productivity to their destination countries by importing low-quality economic institutions. Using the 1986 Immigration Reform and Control Act (IRCA) as a natural experiment, we test whether the legalization of undocumented immigrants affects the quality of state-level economic institutions in the United States. Using synthetic control models, we find that, in the short run, legalization may increase the burden of government spending. However, in the long run, we find statistically insignificant effects of legalization on economic institutions.