Working Paper: CEPR ID: DP12726
Authors: Joan Monras; Javier Vázquez Grenno; Ferran Elias
Abstract: This paper studies the legalization of 600,000 non-EU immigrants by the unexpectedly elected Spanish government following the terrorist attacks of 2004. By comparing non-EU to EU immigrants we first estimate that the policy did not lead to magnet effects. We then show that the policy change increased labor market opportunities for immigrants by allowing them to enter sectors of the economy with fewer informal employment. We rely on cross-province comparisons to document that payroll-tax revenues increased by around 4,000 euros per legalized immigrant, and the heterogeneous effect of the policy on various groups of workers. We provide a theoretical framework based on monopsonistic competition to guide our empirical work and interpret our findings.
Keywords: immigration; undocumented immigrants; public policy
JEL Codes: F22; J31; J61; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Amnesty policy change (H26) | labor market opportunities for immigrants (J68) |
| Amnesty policy change (H26) | payroll tax revenues (H29) |
| labor market opportunities for immigrants (J68) | formal employment (J46) |
| Amnesty policy change (H26) | informal employment (J46) |
| Amnesty policy change (H26) | movement of newly legalized immigrants to higher-paying sectors (J69) |