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Back to Black? The Impact of Regularizing Migrant Workers

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Abstract

This paper provides a firm and individual level analysis of the impact on labor market outcomes of regularizing undocumented migrant workers. Using unique administrative data released by the Italian Social Security Institute, we evaluate Italy's largest ever regularization process. We employ an unexpected quasi-random auditing program to deal with firms' self-selection into treatment. Our results show that regularization has only a short-run positive impact on firm employment and no effect on firm-level wages. Nonetheless, 73.5% of regularized migrants remains within the formal Italian labor market, and we find also that legalized migrant coworkers were not affected (negatively) by the reform. Our findings highlight that high mobility of migrants to other firms, provinces and industries is an important driver of our results.

Suggested Citation

  • 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.
    • Handle: RePEc:sef:csefwp:517
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    More about this item

    Keywords

    Migration; Legalization; Shadow Economy; Tax Compliance; Policy Evaluation;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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