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Illegal immigration, technology adoption and welfare

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  • Munirul H. Nabin
  • Pasquale M. Sgro

Abstract

A debate in the illegal immigration and technology adoption literature suggests that hiring illegal immigrants may be hindering the adoption of new technology, which in turn harms a country's productivity growth. This paper analyses an individual firm's behaviour regarding new technology adoption in the presence of illegal immigrants. We assume a Ricardian economy and analyse immigration of illegal unskilled workers in a model of Cournot duopoly where firms are producing homogenous and non-traded goods, and hiring illegal immigrants. A two-stage simultaneous move game is set up: in Stage 1, given the opportunity of hiring illegal immigrants, an individual firm decides whether to adopt the new technology or not, where technology adoption is costly. In Stage 2, each firm will choose the Cournot output level. Solving this two-stage game, we conclude that (i) given the opportunity of hiring illegal immigrants, an individual firm may adopt the new technology and (ii) in the case of zero tolerance of illegal immigration, technology adoption may increase but such technology adoption is immiserizing as it reduces the total surplus.

Suggested Citation

  • Munirul H. Nabin & Pasquale M. Sgro, 2013. "Illegal immigration, technology adoption and welfare," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(2), pages 183-198, June.
    • Handle: RePEc:taf:raaexx:v:20:y:2013:i:2:p:183-198
    DOI: 10.1080/16081625.2012.738803
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    1. Nabin, Munirul H. & Sgro, Pasquale M., 2010. "Employer sanctions, illegal migration and welfare," Working Papers eco_2010_01, Deakin University, Department of Economics.
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    Cited by:

    1. Chen, Hsiu-Li & Hwang, Hong & Mukherjee, Arijit & Shih, Pei-Cyuan, 2016. "Tariffs, technology licensing and adoption," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 234-240.

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