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Illegal Immigration, Foreign Aid, and the Transit Countries

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  • Slobodan Djajic
  • Michael S. Michael

Abstract

This article examines the problem facing an advanced, final-destination country as it seeks cooperation from its less-well-off neighbors to impede unauthorized, third-country migrants from transiting their territories. With that aim, it transfers aid to the transit countries in support of their border-control efforts. Aid recipients, however, may have an incentive to divert resources to border security objectives other than immigration control. We characterize the donor’s optimal allocation of aid between the transit countries and the optimal use of aid by the latter in the Nash equilibrium. These values of the policy instruments are subsequently compared with those in an equilibrium where the transit countries (i) compete for a share of aid, (ii) collude to maximize joint welfare, and (iii) follow the donor who moves first. (JEL codes: F22).

Suggested Citation

  • Slobodan Djajic & Michael S. Michael, 2016. "Illegal Immigration, Foreign Aid, and the Transit Countries," CESifo Economic Studies, CESifo Group, vol. 62(3), pages 572-593.
    • Handle: RePEc:oup:cesifo:v:62:y:2016:i:3:p:572-593.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifv024
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    References listed on IDEAS

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    1. Facchini, Giovanni & Testa, Cecilia, 2021. "The rhetoric of closed borders: Quotas, lax enforcement and illegal immigration," Journal of International Economics, Elsevier, vol. 129(C).
    2. Subhayu Bandyopadhyay & Dustin Chambers & Jonathan Munemo, 2012. "Foreign aid, illegal immigration, and host country welfare," Working Papers 2012-007, Federal Reserve Bank of St. Louis.
    3. Ethier, Wilfred J, 1986. "Illegal Immigration," American Economic Review, American Economic Association, vol. 76(2), pages 258-262, May.
    4. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
    5. Bond, Eric W. & Chen, Tain-Jy, 1987. "The welfare effects of illegal immigration," Journal of International Economics, Elsevier, vol. 23(3-4), pages 315-328, November.
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    Cited by:

    1. Alexandra Brausmann & Slobodan Djajić, 2022. "Dynamics of mass migration," Review of International Economics, Wiley Blackwell, vol. 30(5), pages 1414-1431, November.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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