Smuggling Humans: A Theory of Debt-Financed Migration
AbstractWe 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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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1025.
Length: 30 pages
Date of creation: Feb 2004
Date of revision:
Publication status: published in: Journal of the European Economic Association, 2006, 4 (6), 1085-1111
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Other versions of this item:
- Guido Friebel & Sergei Guriev, 2006. "Smuggling Humans: A Theory of Debt-financed Migration," Journal of the European Economic Association, MIT Press, vol. 4(6), pages 1085-1111, December.
- Friebel, Guido & Guriev, Sergei, 2004. "Smuggling Humans: A Theory of Debt-Financed Migration," CEPR Discussion Papers 4305, C.E.P.R. Discussion Papers.
- 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.
- 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, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-29 (All new papers)
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