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Liquidity-constrained migrants

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  • Djajić, Slobodan
  • Vinogradova, Alexandra

Abstract

Liquidity constraints represent a major obstacle for potential migrants trying to meet the high cost of undocumented international migration. Some cover it by borrowing from a smuggling organization with a commitment to repay the loan by working in the destination country as bonded laborers. This paper compares alternative ways of financing migration and shows that debt bondage is optimal only if the international wage differential is sufficiently large in relation to migration costs. Tougher border controls as well as internal enforcement measures can be expected to reduce the incidence of debt-bonded relative to self-financed migration, although they may not necessarily lower the overall inflow of illegal aliens.

Suggested Citation

  • Djajić, Slobodan & Vinogradova, Alexandra, 2014. "Liquidity-constrained migrants," Journal of International Economics, Elsevier, vol. 93(1), pages 210-224.
    • Handle: RePEc:eee:inecon:v:93:y:2014:i:1:p:210-224
    DOI: 10.1016/j.jinteco.2014.02.004
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    Cited by:

    1. Emmanuelle Auriol & Alice Mesnard, 2016. "Sale of Visas: a Smuggler's Final Song?," Economica, London School of Economics and Political Science, vol. 83(332), pages 646-678, October.
    2. Oded Stark & Marcin Jakubek, 2022. "Can the evolution of joint savings agreements counter the effect of higher costs of migration on its intensity?," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 757-796, July.
    3. Djajic, Slobodan & Kirdar, Murat G. & Vinogradova, Alexandra, 2016. "Source-country earnings and emigration," Journal of International Economics, Elsevier, vol. 99(C), pages 46-67.
    4. Djajić, Slobodan, 2014. "Asylum seeking and irregular migration," International Review of Law and Economics, Elsevier, vol. 39(C), pages 83-95.
    5. Slobodan Djajić, 2015. "Financial Support from the Family Network and Illegal Immigration," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 387-403, May.
    6. Slobodan Djajić & Michael S. Michael, 2014. "Controlling Illegal Immigration: On the Scope for Cooperation with a Transit Country," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 808-824, September.
    7. Slobodan Djajić & Alexandra Vinogradova, 2019. "Immigration Policies and the Choice between Documented and Undocumented Migration," Economica, London School of Economics and Political Science, vol. 86(341), pages 201-228, January.
    8. Slobodan Djajić, 2017. "Transit migration," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 1017-1045, November.
    9. Michel Beine, 2020. "Age, Intentions and the Implicit Role of Out-Selection Factors of International Migration," CESifo Working Paper Series 8688, CESifo.

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    More about this item

    Keywords

    Liquidity constraints; Bonded labor; Illegal immigration; Human smuggling;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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