The regularisation of immigrants that took place in the year 2005, following the general elections of 2004 and the entry into force of the application regulations (through Royal Decree 2393/2004, dated 30 December), is differentiated from previous processes due to its massive and unexpected nature and the fact that it was exclu-sively aimed at workers in an irregular situation. It is worth pointing out that, when a government introduces policies that improve immigrants’ wellbeing, debate usually emerges around possible secondary effects. One of the arguments most frequently advanced is that these types of policies can lead to a “call effect” that incentiv-ises the arrival of more immigrants, supposedly attracted by the new measures. At the time of the regulatory change, which proposed a substantial improvement with regard to the right to work in the formal economy, this aspect was one of the ones that generated most controversy. At a nationwide level, the measure was questioned by the main opposition party, and at a European level, by other Member States such as Germany and the Netherlands.

The results of the study conducted show that this normalisation process for foreign workers did not lead to a “call effect” for new immigrants. To evaluate this, the number of immigrants originating from countries affect-ed by the measure introduced was compared with the number from countries not affected by it. Based on this analysis, the conclusion is that there was no significant increase in net immigration flows originating from the affected countries. Thus, no differentiated increase is observed in the stock of immigrants from outside of the European Union originating from countries affected by the change, with respect to that of countries from the European Union, not affected by the reform, in the years subsequent to its application. 

The application of the new regulation generated more formal employment among immigrants in an irregular situation, with an improvement in their labour trajectories. The percentage of immigrants among the total number of Social Security contributors went up from 6% to 9% during the first months of the regularisation period. The case of domestic work, a sector with a high level of informal work and a significant concentration of immigrants in an irregular situation, is paradigmatic. Coinciding with the regulatory change, the number of people who were Social Security contributors with a type of contract associated with domestic work services (belonging to the special regime contract types) almost tripled, increasing from 60,000 to 160,000 people who are contributors.

The reform not only enabled immigrants in an irregular situation to access the formal economy, but also broadened their work opportunities. One year following the introduction of the regulation, approximately half of the immigrants regularised in the domestic workers sector gained jobs in companies of a greater size in other sectors of the economy, in occupations with a lower prevalence of informality. The regularisation process represented, therefore, changes in their access to formal employment in the short term and in their capacity, in the medium and long term, for accessing new jobs offering better conditions.

One of the most immediate consequences of extraordinary regularisation processes is that immigrants in an irregular situation start to pay taxes on their income. One of the main objectives of a reform of this type is based on this reality: favouring tax collection. The data from the study carried out show that, on a provincial scale, revenue due to income tax increased by 4,189 euros for each new regularised immigrant. Looking solely at the so-called “domestic work regime”, for which it would be logical to foresee a greater increase due to the high concentration of immigrants, income tax collection intensified, effectively, in provinces with a higher number of immigrants by 50% in 2005 and by 100% in 2006.

Tax revenues were, however, lower than expected, judging by the increase in contributors to the Social Security system and the level of contribution prior to the reform. For an increase of 10% in the number of workers regis-tered with the Social Security system, the total revenue due to income tax grew by only 5.5%. This points to the fact that the reform could have unforeseeable consequences for the labour market.

The regulatory change fulfilled its main objective of significantly increasing formal employment among the immigrant population. The reform had, however, a differentiated effect between different groups of workers. Native workers without university qualifications were most affected by the reform. During the two years fol-lowing it, for every ten new immigrants newly registered with the Social Security system, around four native workers with a low education level lost their jobs. The loss of employment among native workers with low qualifications was not due to greater competition for low-skilled jobs, but rather, to the effectiveness of the measures against informal work applied by the Government (for example, a 132% increase in work inspections). These measures destroyed jobs in the informal economy, for both local workers and immigrants alike.

However, the reform led to an increase of around 3% in the average wage of native workers with both low and high qualifications. In contrast, for immigrant workers with low qualifications, wages decreased. This worsen-ing of salary conditions meant an increase in internal mobility. During the two years following the reform, for every ten immigrants regularised in a locality, around five emigrated to other municipalities.

The regularisation of 600,000 immigrants carried out during the government of Rodríguez Zapatero, the practical application of which occurred at the start of 2005, led to different consequences. Firstly, the regularisation did not result in any “call effect”. It is not observed, from the investigation carried out, that the stock of immigrants from countries of origin affected by the regularisation would increase with respect to those not affected by the measure. Moreover, the results show that immigrants who benefited from the regularisation saw how their work opportunities improved. Finally, it is worth highlighting that the regularisation had effects on both public tax revenues and on employment. The public sector collected around 4,000 additional euros per regularised immigrant. Furthermore, the additional cost of hiring immigrants in the formal sector, upon starting to pay the social security costs of the people concerned, led to the substitution of low-qualified workers with others who were more highly qualified. 

In relation with tax revenues, it is important to indicate that, for the purpose of evaluating the size of the average increase, its counterpart should be taken into account, i.e., the increase in public spending that an extraordinary regularisation involves. In the case of the measures applied in Spain, this was not an important element, since the main spending areas, health and education, were already accessible for immigrants in an irregular situation prior to the reform introduced.

CASCIO, E. U., E. G. LEWIS (2019): "Distributing the Green (Cards): Permanent Residency and Personal Income Taxes after the Immigration Reform and Control Act of 1986", Journal of Public Economics, 172, 135-150.

DI PORTO, E., E. M. MARTINO, P. NATICCHIONI (2018): "Back to Black? The Impact of Regularizing Migrant Workers", CSEF Working Papers, 517.

GARCÍA-MONTALVO, J. (2011): "Voting after the Bombings: A Natural Experiment on the Effect of Terrorist Attacks on Democratic Elections", The Review of Economics and Statistics, 93(4), 1146-1154.

MONRÀS, J., J. VÁZQUEZ-GRENNO, F. ELIAS (2021): "Understanding the Effects of Granting Work Permits to Undocumented Immigrants". Working paper

PINOTTI, P. (2017): «Clicking on Heaven’s Door: The Effect of Immigrant Legalization on Crime», American Economic Review, 107(1), 138-168.