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Guest Workers in the Underground Economy

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  • Djajic, S.
  • Mesnard, A.
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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://openaccess.city.ac.uk/2918/1/13_05_Djajic_Mesnard_CityU_WP.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, City University London in its series Working Papers with number 13/05.

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    Date of creation: 2013
    Date of revision:
    Handle: RePEc:cty:dpaper:13/05

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    Postal: Department of Economics, Social Sciences Building, City University London, Whiskin Street, London, EC1R 0JD, United Kingdom,
    Phone: +44 (0)20 7040 8500
    Web page: http://www.city.ac.uk
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    1. 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.
    2. Guido Friebel & Sergei Guriev, 2002. "Smuggling Humans: A Theory of Debt-Financed Migration," Working Papers w0058, Center for Economic and Financial Research (CEFIR), revised Dec 2005.
    3. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, vol. 81(2), pages 500-513, December.
    4. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, vol. 84(1), pages 1-14, May.
    5. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
    6. Jean Baldwin Grossman, 1984. "Illegal immigrants and domestic employment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 37(2), pages 240-251, January.
    7. Slobodan Djajic & Michael S. Michael, 2011. "Guest Worker Programs: A Theoretical Analysis of Welfare of the Host and Source Countries," University of Cyprus Working Papers in Economics 05-2011, University of Cyprus Department of Economics.
    8. 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, vol. 54(2), pages 739-766, 05.
    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.
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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, vol. 12(2), pages 16-19, 07.

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