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Immigrants' Legalization and Firms: Evidence from the 2007 EU Enlargement

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Abstract

How do firms respond to permanent changes in the legal status of a substantial group of migrants? We study the effects of the entry to the European Union of Bulgaria and Romania in the Italian labor market. This event was particularly relevant for Italy, where Romanians constitute approximately one fifth of the immigrant population. We use administrative employer-employee data on the universe of private-sector workers and an IV-DID design to identify the effects of this change in migrants' legal status on firms' personnel and performance. Firms exhibit an increase in the share of migrant workers at the expense of natives, not accompanied by a change in wage growth for either group. Migrant workers' gains are shown in increased job mobility and job security. Despite growing in size, firms show a decrease in per capita business outputs. Our results indicate that the change in legal status led to a formalization of undocumented workers and had positive implications for the affected migrant workers.

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  • Vittoria Dicandia & Silvia Vannutelli, 2025. "Immigrants' Legalization and Firms: Evidence from the 2007 EU Enlargement," Working Papers 25-04, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:99538
    DOI: 10.26509/frbc-wp-202504
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    References listed on IDEAS

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    1. Gianmarco I. P. Ottaviano & Giovanni Peri, 2021. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 9, pages 245-290, World Scientific Publishing Co. Pte. Ltd..
    2. Paolo Pinotti, 2017. "Clicking on Heaven's Door: The Effect of Immigrant Legalization on Crime," American Economic Review, American Economic Association, vol. 107(1), pages 138-168, January.
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    4. Ottaviano, Gianmarco I.P. & Peri, Giovanni & Wright, Greg C., 2018. "Immigration, trade and productivity in services: Evidence from U.K. firms," Journal of International Economics, Elsevier, vol. 112(C), pages 88-108.
    5. Kirk Doran & Alexander Gelber & Adam Isen, 2022. "The Effects of High-Skilled Immigration Policy on Firms: Evidence from Visa Lotteries," Journal of Political Economy, University of Chicago Press, vol. 130(10), pages 2501-2533.
    6. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2016. "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.
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    More about this item

    Keywords

    migration; legalization; firms; personnel;
    All these keywords.

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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