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Fiscal Revenues and Commitment in Immigration Amnesties

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  • Magris, Francesco
  • Russo, Giuseppe

Abstract

Immigration amnesties aim at reducing the size of the informal sector and identifying employers of undocumented workers. However, potential fiscal gains are also important: tax revenues are crucial in all kinds of amnesties. Nevertheless, over the last thirty years an average of 24% of all applications have been rejected. It remains an open question as to why governments accept this loss of fiscal base. We argue that applying for amnesty is basically self-incrimination, and that immigration-averse governments have an incentive to use applications as a means to identify and expel illegal workers. In equilibrium only applicants with the highest income are granted amnesty, while the poorest immigrants do not apply, and fiscal revenues remain sub-optimal. We show that electoral accountability can solve the commitment problem. However, the large number of rejections suggests that the strict voter-coordination required by this mechanism is hard to obtain in practice. Therefore immigration amnesties seem doomed to inefficiency.

Suggested Citation

  • Magris, Francesco & Russo, Giuseppe, 2016. "Fiscal Revenues and Commitment in Immigration Amnesties," European Journal of Political Economy, Elsevier, vol. 42(C), pages 75-90.
  • Handle: RePEc:eee:poleco:v:42:y:2016:i:c:p:75-90 DOI: 10.1016/j.ejpoleco.2015.11.004
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    Cited by:

    1. repec:spr:portec:v:16:y:2017:i:2:d:10.1007_s10258-017-0130-4 is not listed on IDEAS
    2. Pierre ANDREOLETTI & Pierre GAZE & Maxime MENUET, 2015. "Can a Platform Make Profit with Consumers' Mobility? A Two-Sided Monopoly Model with Random Endogenous Side-Switching," LEO Working Papers / DR LEO 1969, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    3. Maxime MENUET & Patrick VILLIEU, 2015. "Why are Reforms incomplete? Reputation versus the "need for enemies"," LEO Working Papers / DR LEO 2090, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.

    More about this item

    Keywords

    Amnesty; Illegal Immigration; Time Consistency; Incentive Compatibility;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other

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