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Smuggling Humans: A Theory of Debt-Financed Migration

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Author Info
Friebel, Guido
Guriev, Sergei

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Abstract

We introduce financial constraints in a theoretical analysis of illegal immigration. Intermediaries finance the migration costs of wealth-constrained migrants, who enter temporary servitude contracts to pay back the debt. These debt/labour contracts are more easily enforceable in the illegal than in the legal sector of the host country. Hence, when moving from the illegal to the legal sector becomes more costly because of, for instance, stricter deportation policies, fewer immigrants default on debt. This reduces the risks for intermediaries, who are then more willing to finance illegal migration. Stricter deportation policies may thus increase rather than decrease the ex ante flow of illegal migrants. We also show that stricter deportation policies worsen the skill composition of immigrants. While stricter border controls decrease overall immigration, they may also result in an increase of debt-financed migration.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4305.

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Date of creation: Mar 2004
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Handle: RePEc:cpr:ceprdp:4305

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Related research
Keywords: financial contracting illegal migration indentured servitude wealth constraints

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Find related papers by JEL classification:
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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  1. Guillermina Jasso & Douglas S. Massey & Mark R. Rosenzweig & James P. Smith, 2004. "The New Immigrant Survey Pilot (NIS-P): Overview and New Findings about U.S. Legal Immigrants at Admission," Labor and Demography 0403002, EconWPA. [Downloadable!]
  2. Gordon H. Hanson & Raymond Robertson & Antonio Spilimbergo, 1999. "Does Border Enforcement Protect U.S. Workers from Illegal Immigration?," NBER Working Papers 7054, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Epstein, Gil S. & Weiss, Avi, 2001. "A Theory of Immigration Amnesties," IZA Discussion Papers 302, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Chiswick, Barry R. & Hatton, Timothy J., 2002. "International Migration and the Integration of Labor Markets," IZA Discussion Papers 559, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Laurence S. Moss, 2001. "Editor's Introduction," American Journal of Economics and Sociology, Blackwell Publishing, vol. 60(3), pages 597-599, 03. [Downloadable!] (restricted)
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  7. Laurence S. Moss, 2001. "Editor's Introduction," American Journal of Economics and Sociology, Blackwell Publishing, vol. 60(4), pages 707-709, 04. [Downloadable!] (restricted)
  8. Chau, Nancy H, 2001. "Strategic Amnesty and Credible Immigration Reform," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 604-34, July. [Downloadable!] (restricted)
  9. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer, vol. 12(1), pages 91-116. [Downloadable!] (restricted)
  10. Laurence S. Moss, 2001. "Editor's Introduction," American Journal of Economics and Sociology, Blackwell Publishing, vol. 60(1), pages 1-7, 01. [Downloadable!] (restricted)
  11. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Laurence S. Moss, 2001. "Editor's Introduction," American Journal of Economics and Sociology, Blackwell Publishing, vol. 60(2), pages 419-422, 04. [Downloadable!] (restricted)
  13. Slobodan Djajic, 1999. "Dynamics of immigration control," Journal of Population Economics, Springer, vol. 12(1), pages 45-61. [Downloadable!] (restricted)
  14. Avi Weiss & Arye L. Hillman & Gil S. Epstein, 1999. "Creating illegal immigrants," Journal of Population Economics, Springer, vol. 12(1), pages 3-21. [Downloadable!] (restricted)
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  15. Zimmermann, Klaus F, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring. [Downloadable!] (restricted)
  16. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
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  17. Kevin O'Rourke & Jeffrey Williamson, 2001. "Globalization and History," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, December.
  18. Sherrie A. Kossoudji & Deborah A. Cobb-Clark, 2002. "Coming out of the Shadows: Learning about Legal Status and Wages from the Legalized Population," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 598-628, July. [Downloadable!]
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  19. David Wilson & Harald Bauder, 2001. "Introduction," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 92(3), pages 258-260, 08. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bianchi, Milo, 2006. "Immigration Policy and Self-Selecting Migrants," Working Paper Series in Economics and Finance 627, Stockholm School of Economics, revised 02 Nov 2006. [Downloadable!]
    Other versions:
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