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Understanding the Effects of Legalizing Undocumented Immigrants

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  • Elias, Ferran
  • Monras, Joan
  • Vázquez Grenno, Javier

Abstract

This paper investigates the consequences of the legalization of around 600,000 immigrants by the unexpectedly elected Spanish government of Zapatero following the terrorist attacks of March 2004 (Montalvo, 2011). Using detailed data from payroll-tax revenues, we estimate that each newly legalized immigrant increased local payroll-tax revenues by 4,189 euros on average. This estimate is only 55 percent of what we would have expected from the size of the influx of newly documented immigrants, which suggests that newly legalized immigrants probably earned lower wages than other workers and maybe affected the labor-market outcomes of those other workers. We estimate that the policy change deteriorated the labor-market outcomes of some low-skilled natives and immigrants and improved the outcomes of high-skilled natives and immigrants. This led some low-skilled immigrants to move away from high-immigrant locations. Correcting for internal migration and selection, we obtain that each newly legalized immigrant increased payroll-tax revenues by 4,801 euros, or 15 percent more than the estimates from local raw payroll-tax revenue data. This shows the importance of looking both at public revenue data and the labor market to understand the consequences of amnesty programs fully.

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  • Elias, Ferran & Monras, Joan & Vázquez Grenno, Javier, 2018. "Understanding the Effects of Legalizing Undocumented Immigrants," CEPR Discussion Papers 12726, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12726
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    Cited by:

    1. Bustos, Paula & Castro Vincenzi, Juan Manuel & Monras, Joan & Ponticelli, Jacopo, 2018. "Structural Transformation, Industrial Specialization, and Endogenous Growth," CEPR Discussion Papers 13379, C.E.P.R. Discussion Papers.
    2. Cascio, Elizabeth U. & Lewis, Ethan G., 2019. "Distributing the Green (Cards): Permanent residency and personal income taxes after the Immigration Reform and Control Act of 1986," Journal of Public Economics, Elsevier, vol. 172(C), pages 135-150.
    3. Cem Özgüzel, 2021. "The Cushioning Effect of Immigrant Mobility," CESifo Working Paper Series 9268, CESifo.
    4. Francesc Ortega, 2021. "Occupational Barriers and the Productivity Penalty from Lack of Legal Status," CReAM Discussion Paper Series 2118, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    5. Bahar, Dany & Ibáñez, Ana María & Rozo, Sandra V., 2021. "Give me your tired and your poor: Impact of a large-scale amnesty program for undocumented refugees," Journal of Development Economics, Elsevier, vol. 151(C).
    6. Ortega Francesc & Edwards Ryan & Hsin Amy, 2018. "The Economic Effects of Providing Legal Status to DREAMers," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-18, June.
    7. Paula Bustos & Juan Manuel Castro-Vincenzi & Joan Monras & Jacopo Ponticelli, 2019. "Industrialization without Innovation," NBER Working Papers 25871, National Bureau of Economic Research, Inc.
    8. Stefano Fusaro & Enrique López-Bazo, 2018. "“The Impact of Immigration on Native Employment: Evidence from Italy”," AQR Working Papers 201811, University of Barcelona, Regional Quantitative Analysis Group, revised Jul 2018.
    9. Diego Ravenda & Maika M. Valencia-Silva & Josep M. Argiles-Bosch & Josep García-Blandón, 2021. "The Effects of Immigration on Labour Tax Avoidance: An Empirical Spatial Analysis," Journal of Business Ethics, Springer, vol. 170(3), pages 471-496, May.
    10. Edoardo Di Porto & Enrica Maria Martino & Paolo Naticchioni, 2018. "Back to Black? The Impact of Regularizing Migrant Workers," CSEF Working Papers 517, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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    More about this item

    Keywords

    Immigration; public policy; undocumented immigrants;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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