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Understanding the Effects of Legalizing Undocumented Immigrants

Author

Listed:
  • Joan Monras

    () (CEMFI and CEPR)

  • Javier Vázquez-Grenno

    () (Universitat de Barcelona and IEB)

  • Ferran Elias

    () (University of Copenhagen)

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 (Garcia-Montalvo, 2011). Using detailed data from payroll-tax revenues, we estimate that each newly legalized immigrant increased local social-security revenues by 3,504 Euros on average. This estimate is only 49 percent of what we would have expected from the size of the newly documented immigrants, which suggests that newly legalized immigrants probably earned lower wages than, and maybe affected the labor-market outcomes of, 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 highskilled 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 re nues by 4,368 Euros or 25 percent more than the raw payroll-tax revenue data estimates. This shows the importance of looking both at public revenue data and the labor market to understand the consequences of amnesty programs fully.

Suggested Citation

  • Joan Monras & Javier Vázquez-Grenno & Ferran Elias, 2017. "Understanding the Effects of Legalizing Undocumented Immigrants," CReAM Discussion Paper Series 1708, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:1708
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    References listed on IDEAS

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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. Ortega, Francesc & Edwards, Ryan & Hsin, Amy, 2018. "The Economic Effects of Providing Legal Status to DREAMers," IZA Discussion Papers 11281, Institute of Labor Economics (IZA).
    4. 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.

    More about this item

    Keywords

    Immigration; undocumented immigrants; public policy evaluation;

    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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