Illegal immigration is a major policy challenge in Europe, in particular in countries on the external border of the EU such as Italy or Spain. However, there are likely to be important effects on the rest of the EU, too, depending on the policies against illegal immigration in border countries. This paper determines optimal enforcement and amnesty policies on illegal immigration in a federation with border and non-border countries. We show that in the Nash equilibrium with positive enforcement spending in both countries, total enforcement spending is too low to maximize joint welfare. In this case, we find that a side payment can be necessary to achieve the cooperative optimum, depending on the relative size of populations in the two countries.
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Paper provided by University of Paderborn, CIE Center for International Economics in its series Working Papers with number
23.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
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