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Overstaying Guest Workers and the Incentives for Return

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  • Slobodan Djajić
  • Alexandra Vinogradova

Abstract

A guest-worker program can be a very flexible and convenient way of meeting labor shortages in a host country, assuming that the migrants adhere to the rules of the program. This article investigates the conditions under which guest workers have sufficient incentives for voluntary return to their country of origin when their work permits expire. Should they choose to overstay, the article examines how various factors influence the optimal duration of the overstay phase of a foreign worker’s planning horizon. The analysis is conducted in the context of a lenient enforcement regime that avoids deportations of undocumented aliens. It relies instead on eligibility criteria and pricing instruments, such as partial withholding of salary and an exit tax for those who overstay, to provide incentives for voluntary return at the end of the contract period. (JEL code: F22)

Suggested Citation

  • Slobodan Djajić & Alexandra Vinogradova, 2015. "Overstaying Guest Workers and the Incentives for Return," CESifo Economic Studies, CESifo Group, vol. 61(3-4), pages 764-796.
    • Handle: RePEc:oup:cesifo:v:61:y:2015:i:3-4:p:764-796.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifu035
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    References listed on IDEAS

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    1. Madeline Zavodny & Pia M. Orrenius, 2010. "Beside the Golden Door: U.S. Immigration Reform in a New Era of Globalization," Books, American Enterprise Institute, number 6408, September.
    2. Schiff, Maurice, 2007. "Optimal Immigration Policy: Permanent, Guest-Worker, or Mode IV?," IZA Discussion Papers 2871, Institute of Labor Economics (IZA).
    3. Carlo Favero, 2005. "Consumption, Wealth, the Elasticity of Intertemporal Substitution and Long-Run Stock Market Returns," Working Papers 291, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    4. Holzmann, Robert & Koettl, Johannes & Chernetsky, Taras, 2005. "Portability regimes of pension and health care benefits for international migrants: an analysis of issues and good practices," Social Protection Discussion Papers and Notes 32750, The World Bank.
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    Cited by:

    1. Mauro Testaverde & Harry Moroz & Claire H. Hollweg & Achim Schmillen, 2017. "Migrating to Opportunity," World Bank Publications - Books, The World Bank Group, number 28342, December.
    2. Nakamura, Nobuyuki & Suzuki, Aya, 2022. "How Altruism Works during a Pandemic: Examining the Roles of Financial Support and Degrees of Individual Altruism on International Remittance," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322073, Agricultural and Applied Economics Association.
    3. 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.
    4. Djajić, Slobodan & Mesnard, Alice, 2015. "Guest workers in the underground economy," Labour Economics, Elsevier, vol. 35(C), pages 53-62.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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