Fasani, and Frattini (2018) find that immigrants who are potentially eligible for legal status are more likely than ineligible undocumented immigrants to be employed. Using the 1990 Legalized Population Survey, Rivera-Batiz (1999) estimate a 52% wage penalty for Mexican undocumented immigrants in the United States, while Kossoudji and Cobb-Clark (2002) report a wage penalty that ranges between 14% and 24%. Phillips and Massey (1999) find that the Immigration Reform and Control Act in the United States, which made it illegal to hire unauthorized immigrants, is associated with a larger wage penalty for undocumented migrants as employers pass the costs of unauthorized hiring on to workers. Accounting for selection, Schluter and Wahba (2009) also find a significant effect of illegality on wages in the host country but mixed effects on remitting behavior. On the other hand, Dustmann, Fasani, and Speciale (2017) find that undocumented migrants consume about 40% less than documented migrants in Italy, partly due to their lower incomes relative to documented migrants.

The literature has put forward several explanations for the worse outcomes experienced by undocumented migrants compared with documented migrants. First, several studies show that undocumented migrants have weak bargaining power due to the lack of legal work options. Without viable outside options, undocumented migrants are confined into poor jobs (Gleeson & Gonzales, 2012; Gonzales, 2011). For instance, undocumented migrants are more likely to work in physically exhausting and dangerous jobs and receive no compensating differential, which is analogous to receiving lower wages than documented workers with similar education levels (Hall & Greenman, 2015). Second, the occupational choices of undocumented migrants might be limited by fear of exposure to apprehension by immigration enforcement agencies, and relatedly, being undocumented may limit workers’ ability to maximize their potential, which may lead to lower productivity (Ortega & Hsin, 2018). Third, several studies highlight the increased risk of depression and anxiety among undocumented migrants—due to the threat of deportation and poorer labor market conditions—which is also likely to negatively affect worker productivity (Abrego, 2011; Gonzales, 2011; Patler & Pirtle, 2018).

There is also a well-established academic literature on the determinants and impacts of migration on countries of origin. Indeed, there is a growing body of evidence showing that temporary migration can be beneficial for migrants who accumulate savings and skills, which they use to better themselves upon return (see Wahba (2014) for a survey of this literature). On the impact of temporary migration experiences on return migrants’ wages, several papers find that there is a positive wage premium for return migrants associated with overseas work experience (Co, Gang, & Yun, 2000; De Coulon & Piracha, 2005). Ambrosini, Mayr, Peri, and Radu (2015) find that for a source country, like Romania, relatively high rates of temporary migration have positive long-run effects on average skills and wages. Lacuesta (2010) finds an 11% wage gap between returning migrants and observationally equivalent non-migrants in 4