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Understanding the Effects of Legalizing Undocumented Immigrants

Listed author(s):
  • Monras, Joan

    ()

    (CEMFI, Madrid)

  • Vázquez-Grenno, Javier

    ()

    (University of Barcelona)

  • Elias Moreno, Ferran

    ()

    (Columbia University)

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 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 high-skilled natives and immigrants. This led some low-skilled immigrants to move away from high-immigrant locations. Correcting for migration and selection, we obtain that each newly legalized immigrant increased payroll-tax revenues by 4,398 Euros or 26 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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10687.

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Length: 30 pages
Date of creation: Apr 2017
Handle: RePEc:iza:izadps:dp10687
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  1. Neeraj Kaushal, 2006. "Amnesty Programs and the Labor Market Outcomes of Undocumented Workers," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
  2. Antonio Spilimbergo & Gordon H. Hanson, 1999. "Illegal Immigration, Border Enforcement, and Relative Wages: Evidence from Apprehensions at the U.S.-Mexico Border," American Economic Review, American Economic Association, vol. 89(5), pages 1337-1357, December.
  3. José G. Montalvo, 2011. "Voting after the Bombings: A Natural Experiment on the Effect of Terrorist Attacks on Democratic Elections," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1146-1154, November.
  4. Catalina Amuedo-Dorantes & Cynthia Bansak, 2011. "The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(3), pages 443-471, 07.
  5. Joseph G. Altonji & David Card, 1991. "The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 201-234 National Bureau of Economic Research, Inc.
  6. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
  7. Cobb-Clark, Deborah A & Shiells, Clinton R & Lowell, B Lindsay, 1995. "Immigration Reform: The Effects of Employer Sanctions and Legalization on Wages," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 472-498, July.
  8. Amuedo-Dorantes, Catalina & Bansak, Cynthia, 2011. "The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey," IZA Discussion Papers 5576, Institute for the Study of Labor (IZA).
  9. Joan Monras, 2015. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," Sciences Po Economics Discussion Papers 2015-04, Sciences Po Departement of Economics.
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