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Guest Workers in the Underground Economy

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  • Slobodan Djajic

    ()
    (The Graduate Institute)

  • Alice Mesnard

    (City University)

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    Abstract

    Guest-worker programs have been providing rapidly growing economies with millions of temporary foreign workers over the last couple of decades. With the duration of stay strictly limited by program rules in most of the host countries and wages paid to guest workers often set at sub-market levels, many of the migrants choose to overstay and seek employment in the underground economy. This paper develops a general-equilibrium model that relates the flow of guest workers transiting to the underground economy to the rules of the program, enforcement measures of the host country and market conditions facing migrants at home and abroad.

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    File URL: http://www.cream-migration.org/publ_uploads/CDP_24_13.pdf
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    Bibliographic Info

    Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 1324.

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    Date of creation: Nov 2013
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    Handle: RePEc:crm:wpaper:1324

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    Keywords: Temporary migration; undocumented workers; underground economy;

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    References

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    1. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, Elsevier, vol. 84(1), pages 1-14, May.
    2. Friebel, Guido & Guriev, Sergei, 2004. "Smuggling Humans: A Theory of Debt-Financed Migration," IZA Discussion Papers 1025, Institute for the Study of Labor (IZA).
    3. Jean Baldwin Grossman, 1984. "Illegal immigrants and domestic employment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 37(2), pages 240-251, January.
    4. Slobodan Djajić, 2013. "Some Essentials Of A Workable Guest‐Worker Program," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 739-766, 05.
    5. Kossoudji, S.A. & Cobb-Clark, D.A., 1996. "Coming Out of the Shadows: Learning About Legal Status and Wages from the Legalized Population," CEPR Discussion Papers, Centre for Economic Policy Research, Research School of Economics, Australian National University 347, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    6. Slobodan Djajić & Michael S. Michael, 2013. "Guest worker programs: A theoretical analysis of welfare of the host and source countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 22(3), pages 454-475, April.
    7. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, American Economic Association, vol. 76(1), pages 56-71, March.
    8. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, Elsevier, vol. 81(2), pages 500-513, December.
    9. Frank Bean & B. Lowell & Lowell Taylor, 1988. "Undocumented Mexican immigrants and the earnings of other workers in the United States," Demography, Springer, Springer, vol. 25(1), pages 35-52, February.
    10. 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, Springer, vol. 12(1), pages 91-116.
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    Cited by:
    1. Slobodan Djajic, 2014. "Guest-Worker Programs," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 12(2), pages 16-19, 07.

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