New Evidence on the Impact of Legal Status on Immigrant Labor Market Performance: The Spanish Case

C. Amuedo-Dorantes, M.A. Malo and F. Muñoz-Bullón (2013), “New Evidence on the Impact of Legal Status on Immigrant Labor Market Performance: The Spanish Case”, Labour, 27 (1), 93-113.

In this study, we examine the effect of immigrants’ legal status on two crucial measures of their economic assimilation: their likelihood of having a job and their earnings.

Our study adds to the existing literature in various regards. First, we use a dataset on immigrants collected by the Spanish Instituto Nacional de Estadística (INE) using a survey design that was based on the municipal population registers (Padrón Municipal) in order to gather the most representative sample of legal and undocumented immigrants possible. Second, the data being used were collected between November 2006 and February 2007. As such, they allow for a more up to date understanding of the impact of legal status on immigrants’ labor market performance than data collected more than 25 years ago, as in the case of data referred to the implementation of the Immigration Reform and Control Act (IRCA) in the United States. Lastly, we focus on Spain –an interesting case study as the Spanish case presents some unique characteristics. Spain has experienced an impressive growth of its immigrant population during the past 15 years. Additionally, within a relatively short period of time, the Spanish government approved a total of four amnesties in 1991, 1996, 2000-2001 and 2005. The very large immigration rates and the high frequency of the amnesties underscore the relevance of gaining a better understanding of the impact of legal status on immigrants’ labor market performance –a key indicator of their economic assimilation.

We find that a 10 percent increase in the share of legal immigrants would raise the employment likelihood of immigrants by 4 percentage points and their earnings by 3.3 percent. These effects, which prove robust to alternative sample specifications, are quite striking and meaningful from a policy perspective. Take, for instance, the 2005 amnesty. It is estimated that during that last amnesty up to 700,000 undocumented immigrants regularized their status, reducing the number of undocumented immigrants at once and raising the percentage of legal immigrants in the country by 40 percent. Our findings suggest that the 2005 amnesty may have raised the employment likelihood of immigrants by 16 percentage points and their annual earnings by approximately 13.2 percent. While regularizations are clearly just one way of increasing the share of legal immigrants and debatably the best policy to deal with undocumented immigration, the results underscore the importance of legal status in facilitating immigrants’ economic assimilation in a fairly recent immigrant-receiving economy as Spain.

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