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Smuggling Humans: A Theory of Debt-Financed Migration

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Author Info
Friebel, Guido () (University of Toulouse 1, CEPR, WDI and IZA Bonn)
Guriev, Sergei (Princeton University, New Economic School of Moscow, WDI and CEPR)

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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/labor 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, for instance, because of 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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1025.

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Length: 30 pages
Date of creation: Feb 2004
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Handle: RePEc:iza:izadps:dp1025

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

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Find related papers by JEL classification:
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
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

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References listed on IDEAS
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. 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!]
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    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!]
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  5. Genicot, Garance, 2002. "Bonded labor and serfdom: a paradox of voluntary choice," Journal of Development Economics, Elsevier, vol. 67(1), pages 101-127, February. [Downloadable!] (restricted)
  6. Galenson, David W., 1984. "The Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis," The Journal of Economic History, Cambridge University Press, vol. 44(01), pages 1-26, March. [Downloadable!]
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  8. 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)
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  10. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476 Elsevier. [Downloadable!] (restricted)
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  13. 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)
  14. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
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  15. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592.
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  18. 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)
Full references

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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