Formalizing undocumented workers can increase a nation's tax revenue by reducing employer exploitation

Spain's 2026 regularization decree aims to convert 500,000 undocumented migrants into formal taxpayers, challenging the economic logic of restrictive immigration policies. By transitioning these individuals into the legal workforce, the state captures significant tax revenue and social security contributions that were previously lost to the informal economy. This shift reduces the ability of employers to exploit undocumented status to suppress wages, which historically creates downward pressure on pay for the entire domestic labor force.