Understanding the Effects of Legalizing Undocumented Immigrants

30 Pages Posted: 25 Apr 2017

See all articles by Joan Monras

Joan Monras

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Barcelona Graduate School of Economics (Barcelona GSE)

Javier Vázquez-Grenno

University of Barcelona; University of Barcelona - Institut d'Economia de Barcelona (IEB)

Ferran Elias Moreno

Columbia University

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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 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.

Keywords: immigration, amnesty programs

JEL Classification: J2, J6, R1

Suggested Citation

Monras, Joan and Vázquez-Grenno, Javier and Elias Moreno, Ferran, Understanding the Effects of Legalizing Undocumented Immigrants. IZA Discussion Paper No. 10687, Available at SSRN: https://ssrn.com/abstract=2956782 or http://dx.doi.org/10.2139/ssrn.2956782

Joan Monras (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Javier Vázquez-Grenno

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

University of Barcelona - Institut d'Economia de Barcelona (IEB) ( email )

c/ Tinent Coronel Valenzuela, 1-11
Barcelona, 08034
Spain

Ferran Elias Moreno

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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