How Do Interior Immigration Enforcement Policies Affect Business and Job Dynamics in the United States?

Previous research indicates that immigration spurs business dynamism. Policies that restrict immigration may therefore suppress business dynamism. Few studies have examined the effects of such policies on business and job dynamics. We use US data from the Business Dynamics Statistics (BDS) program to examine the effects of policies that require employers to verify workers’ employment eligibility or authorize local law enforcement officers to enforce federal immigration laws. These policies reduce the number of immigrants in an area, particularly immigrants likely to be unauthorized, and thereby may influence business startup and failure rates and job creation and destruction rates. The results indicate that employment eligibility verification requirements dampen most measures of business and job dynamism whereas police-based immigration enforcement raises business exits and job destruction while reducing job creation.