How Spain Is Legalizing Undocumented Migrants and Powering Its Economy

With an upcoming amnesty for an estimated half a million undocumented workers, Spain is charting its own course on immigration policy, while also reinforcing its dependence on migrants to fuel economic growth.

“We are strengthening a migration model based on human rights, integration and coexistence, and compatible with economic growth and social cohesion,” said Elma Saiz, Minister of Inclusion, Social Security and Migrations, on announcing the measures at the end of January.

The government plans to receive applications for the amnesty from April to June, though final dates and details are expected during February.

So far, the government has said immigrants who can prove they have lived in Spain for five months as of December 31, 2025, and who do not have a criminal record, will be eligible to apply for a one-year residency and work permit. People who requested asylum prior to December 31 are also eligible. Migrants may at the same time legalise their underage children, who will be given five-year residency permits.

The 2005 amnesty

To understand the potential economic impact, we can look at the last amnesty in Spain, in 2005, which granted legal status to around 600,000 undocumented workers. Our research has looked at a number of metrics: migration flows, health and education expenditures, payroll and income taxes, and the labour market.

In many ways the results are as noteworthy for what didn’t happen as for what did.

Fears the amnesty would produce a surge in illegal migrants entering Spain proved unfounded. However, Spain’s 2005 amnesty was accompanied by stricter border controls and a crackdown on informal employment, which may have kept the “magnet effect” in check.

We also looked at hospital admissions and demand for education and, again, didn’t see much change. Undocumented immigrants in Spain already have access to emergency care, and it is older Spaniards rather than young immigrants who demand most from the healthcare system.

Easier access to better jobs

As workers entered the formal job market, payroll contributions increased by about €4,000 per legalised migrant per year. In terms of income tax, we saw very little movement: many immigrants earn minimum wage and pay little or no income tax.

Fears were raised about competition for jobs between immigrants and natives. However, the formal market absorbed the new workers with no impact on natives’ employment or wages. In fact, the informal labour market shrank even for native workers, probably because of the government’s crackdown on this type of work.

Perhaps most importantly, the amnesty did seem to act as a catalyst for better work. Looking at the social security system over time, we saw upward mobility among migrants as they moved from one job to another.

There is, however, still work to be done here. Recent research into nine immigrant-receiving countries found that immigrants in Spain earn on average 29% less than native workers, the widest pay gap among the countries studied. This is largely because they struggle to access higher-paying jobs.

Absorbing new workers

There’s no reason to expect the impact this time around will be vastly different from 20 years ago. There are an estimated 800,000 undocumented immigrants in Spain, about 500,000 of whom can qualify and apply for regularisation.

Spain’s economy grew by 2.8% in 2025 and unemployment has dropped below 10% for the first time since the 2008 financial crisis. Unemployment fell to 9.93% in the fourth quarter of 2025 as more than 600,000 new jobs were created, with the services and agricultural sectors experiencing the strongest growth.

There is enough continued demand for workers in the industries immigrants gravitate toward – hospitality, caregiving, construction, agriculture, and so on – that the economy should be able to absorb them.

Additionally, many immigrants come from Central or South America, sharing a language and cultural affinity that will likely make assimilation into Spain’s workforce much easier.

A country of immigrants?

What has changed radically over the last 20 years is that Spain is fast becoming a country of immigrants. While in recent history Spaniards sought work abroad, that changed in the early 2000s when immigration picked up. After levelling off in the decade after the 2008 financial crisis, immigration has been increasing again since 2018.

Official estimates state that, if current demographic trends continue, Spain’s population will grow from its current 49.4 million to 54.6 million by the year 2074, an increase produced exclusively by immigration. According to these estimates, the percentage of the population born outside of Spain will climb from 18% to 39% over the next 50 years.

Given this massive demographic shift, the government would be wise to pay attention to what I call “congestion points” in the economy. These are areas, such as public services, where migration adds pressure, potentially lowering quality of life for migrants and natives alike if left unresolved.

Debate around immigration has become intertwined with other debates crucial to Spain, such as the housing crisis and overtourism. The three issues – immigration, housing and tourism – tend to be especially acute in major cities like Madrid and Barcelona.

That’s where the congestion may occur, as a growing population puts new demands on public infrastructure and services such as transportation. Put simply, more people need more housing, more seats on buses and trains, more school places for their children, and so on. Immigrants must therefore have access to the full range of jobs, and this is where the challenge really begins. Just as there’s no simple solution to the housing crisis or overtourism, there’s no simple solution to migration – not even a generous amnesty.