Unauthorized immigration: Economic boon or burden? Unveiling new insights for sustainable finance at micro and macro levels

Sustainable finance aims to create greater economic and social value through investments that prioritize sustainability issues. A critical contemporary aspect of this field is the economic and social implications of unauthorized immigration, an area lacking empirical evidence due to data limitations on undocumented populations. Unauthorized immigration has become a focal issue at both micro (businesses) and macro (governments) levels in host countries facing continuous migration flows from less developed regions due to geopolitical conflicts, climate change, and growing inequality, particularly the excess demand for low-skilled labor in developed countries. This migration presents both challenges and opportunities, making it a vital area of study within sustainable finance. Our study uses comprehensive data spanning three decades (1990–2021) to analyze the consequences of unauthorized immigration, differentiating between authorized and unauthorized immigrants and highlighting variations based on migration motivations and skill levels. Our findings challenge conventional assumptions, demonstrating the positive economic effects of unauthorized immigration, particularly among long-term unauthorized residents who contribute to GDP growth and mitigate inequality in the host country. The study has significant policy implications, advocating for a nuanced approach that considers the economic and social costs associated with unskilled visa overstayers. It informs policymakers and investors on balancing economic and societal considerations and contributes to discussions on achieving sustainable development goals like poverty alleviation and fostering inclusive opportunities.