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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 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.

Suggested Citation

  • Joan Monras & Javier Vázquez-Grenno & Ferran Elias, 2018. "Understanding the Effects of Legalizing Undocumented Immigrants," Upjohn Working Papers and Journal Articles 18-283, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:18-283
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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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