Discussion Paper Details

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Title: Understanding the Effects of Granting Work Permits to Undocumented Immigrants

Author(s): Ferran Elias, Joan Monras and Javier Vzquez Grenno

Publication Date: February 2018

Keyword(s): Immigration, public policy and undocumented immigrants

Programme Area(s): International Trade and Regional Economics

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.

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Bibliographic Reference

Elias, F, Monras, J and Vzquez Grenno, J. 2018. 'Understanding the Effects of Granting Work Permits to Undocumented Immigrants'. London, Centre for Economic Policy Research.