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Self-Interested Governments, Unionization, and Legal and Illegal Immigration

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Abstract

This paper examines an economy with following properties. Attempts to restrain illegal immigration incur costs. Illegal workers can work only in the competitive sector. Workers and employers bargain over wages in the unionized sector and lobby the government for immigration policy and workers’ bargaining power. The main findings are as follows. If the government can determine legal immigration, then it expropriates rents from labor unions. In that case, neither workers nor employers are worse off, if legal immigration is increased by an international agreement. High per worker public spending involves border enforcement and the protection of union power.

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Bibliographic Info

Article provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its journal AUCO Czech Economic Review.

Volume (Year): 2 (2008)
Issue (Month): 1 (March)
Pages: 007-020

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Handle: RePEc:fau:aucocz:au2008_007

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Keywords: immigration; lobbying; labor unions; menu auction;

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  1. Winter-Ebmer, Rudolf & Zimmermann, Klaus F., 1998. "East-West Trade and Migration: The Austro-German Case," IZA Discussion Papers 2, Institute for the Study of Labor (IZA).
  2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September.
  3. Helmut Hofer & Peter Huber, 2003. "Wage and Mobility Effects of Trade and Migration on the Austrian Labour Market," Empirica, Springer, vol. 30(2), pages 107-125, June.
  4. Gordon M Myers & Yorgos Y Papageorgiou, 1997. "Immigration Control and the Welfare State," Department of Economics Working Papers 1997-01, McMaster University.
  5. Kjetil Storesletten, . "Sustaining Fiscal Policy Through Immigration," Homapage Papers _005, Stockholm University, Institute for International Economic Studies.
  6. Gordon H. Hanson & Antonio Splimbergo, 1999. "Political Economy, Sectoral Shocks, and Border Enforcement," NBER Working Papers 7315, National Bureau of Economic Research, Inc.
  7. Hillman, Arye L. & Weiss, Avi, 1999. "A theory of permissible illegal immigration," European Journal of Political Economy, Elsevier, vol. 15(4), pages 585-604, November.
  8. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects Of Regulation And Deregulation In Goods And Labor Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(3), pages 879-907, August.
  9. Palokangas, Tapio, 2003. "The political economy of collective bargaining," Labour Economics, Elsevier, vol. 10(2), pages 253-264, April.
  10. Jim Dolmas & Gregory W. Huffman, 1998. "On the political economy of immigration and income redistribution," Working Papers 9804, Federal Reserve Bank of Dallas.
  11. Andrea Gavosto & Alessandra Venturini & Claudia Villosio, 1999. "Do Immigrants Compete with Natives?," LABOUR, CEIS, CEIS, vol. 13(3), pages 603-621, 09.
  12. Zimmermann, Klaus F, 1993. "Native Wage Impacts of Foreign Labour: A Random Effects Panel Analysis," CEPR Discussion Papers 851, C.E.P.R. Discussion Papers.
  13. J. Amegashie, 2004. "A political economy model of immigration quotas," Economics of Governance, Springer, vol. 5(3), pages 255-267, November.
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