IDEAS home Printed from https://ideas.repec.org/a/tpr/jeurec/v4y2006i6p1085-1111.html
   My bibliography  Save this article

Smuggling Humans: A Theory of Debt-financed Migration

Author

Listed:
  • Guido Friebel
  • Sergei Guriev

Abstract

We 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 repay the debt. These debt/labor contracts are easier to enforce 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, ex ante, increase rather than decrease the flow of illegal migrants. Furthermore, stricter deportation policies worsen the skill composition of immigrants. While stricter border controls decrease overall immigration, they may result in an increase of debt-financed migration. We also show that there are complementarities between employer sanctions and deportation policies. We use available evidence to check the empirical consistency of the theory. (JEL: J61, K42, O17) (c) 2006 by the European Economic Association.

Suggested Citation

  • 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.
    • Handle: RePEc:tpr:jeurec:v:4:y:2006:i:6:p:1085-1111
    as

    Download full text from publisher

    File URL: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1542-4774/issues
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Guillermina Jasso & Douglas Massey & Mark Rosenzweig & James Smith, 2000. "The new immigrant survey pilot (NIS-P): Overview and new findings about U.S. Legal immigrants at admission," Demography, Springer;Population Association of America (PAA), vol. 37(1), pages 127-138, February.
    2. Barry Chiswick & Timothy J. Hatton, 2003. "International Migration and the Integration of Labor Markets," NBER Chapters, in: Globalization in Historical Perspective, pages 65-120, National Bureau of Economic Research, Inc.
    3. Epstein, Gil S. & Weiss, Avi, 2001. "A Theory of Immigration Amnesties," IZA Discussion Papers 302, Institute of Labor Economics (IZA).
    4. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(1), pages 91-116.
    5. Klaus F. Zimmermann, 1995. "Tackling the European Migration Problems," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 45-62, Spring.
    6. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    7. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
    8. Sherrie A. Kossoudji & Deborah A. Cobb-Clark, 2002. "Coming out of the Shadows: Learning about Legal Status and Wages from the Legalized Population," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 598-628, July.
    9. Avi Weiss & Arye L. Hillman & Gil S. Epstein, 1999. "Creating illegal immigrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(1), pages 3-21.
    10. Ethier, Wilfred J, 1986. "Illegal Immigration," American Economic Review, American Economic Association, vol. 76(2), pages 258-262, May.
    11. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, April.
    12. Chau, Nancy H, 2001. "Strategic Amnesty and Credible Immigration Reform," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 604-634, July.
    13. Galenson, David W., 1984. "The Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis," The Journal of Economic History, Cambridge University Press, vol. 44(1), pages 1-26, March.
    14. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476, Elsevier.
    15. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
    16. Katharine Donato & Jorge Durand & Douglas Massey, 1992. "Stemming the tide? Assessing the deterrent effects of the immigration reform and control act," Demography, Springer;Population Association of America (PAA), vol. 29(2), pages 139-157, May.
    17. Gordon H. Hanson & Raymond Robertson & Antonio Spilimbergo, 2002. "Does Border Enforcement Protect U.S. Workers From Illegal Immigration?," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 73-92, February.
    18. Genicot, Garance, 2002. "Bonded labor and serfdom: a paradox of voluntary choice," Journal of Development Economics, Elsevier, vol. 67(1), pages 101-127, February.
    19. Slobodan Djajic, 1999. "Dynamics of immigration control," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(1), pages 45-61.
    20. repec:reg:rpubli:282 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emmanuelle Auriol & Alice Mesnard, 2016. "Sale of Visas: a Smuggler's Final Song?," Economica, London School of Economics and Political Science, vol. 83(332), pages 646-678, October.
    2. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
    3. Karin Mayr & Alexander Kemnitz, 2012. "Return Migration and Illegal Immigration Control," Vienna Economics Papers vie1208, University of Vienna, Department of Economics.
    4. Gil Epstein & Avi Weiss, 2011. "The why, when, and how of immigration amnesties," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(1), pages 285-316, January.
    5. Alexander Kemnitz & Karin Mayr, 2012. "Return Migration and Illegal Immigration Control," Norface Discussion Paper Series 2012040, Norface Research Programme on Migration, Department of Economics, University College London.
    6. Kar, Saibal, 2016. "A brief review of the economics of illegal migration," MPRA Paper 103466, University Library of Munich, Germany.
    7. Guido Friebel & Sergei Guriev, 2013. "Human smuggling," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 6, pages 121-134, Edward Elgar Publishing.
    8. Slobodan Djajić & Michael S. Michael, 2014. "Controlling Illegal Immigration: On the Scope for Cooperation with a Transit Country," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 808-824, September.
    9. Djajić, Slobodan & Mesnard, Alice, 2015. "Guest workers in the underground economy," Labour Economics, Elsevier, vol. 35(C), pages 53-62.
    10. Epstein, Gil S. & Weiss, Avi, 2001. "A Theory of Immigration Amnesties," IZA Discussion Papers 302, Institute of Labor Economics (IZA).
    11. Jean-Louis Arcand & Linguère M'Baye, 2011. "Braving the waves: The economics of clandestine migration from Africa," CERDI Working papers halshs-00575606, HAL.
    12. Gil S. Epstein & Odelia Heizler (Cohen), 2008. "Illegal migration, enforcement, and minimum wage," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 197-224, Emerald Group Publishing Limited.
    13. Djajić, Slobodan & Vinogradova, Alexandra, 2013. "Undocumented migrants in debt," Labour Economics, Elsevier, vol. 21(C), pages 15-24.
    14. Carlo Devillanova & Francesco Fasani & Tommaso Frattini, 2014. "Employment of Undocumented Immigrants and the Prospect of Legal Status: Evidence from an Amnesty Program," RF Berlin - CReAM Discussion Paper Series 1415, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    15. Tim Krieger & Steffen Minter, 2007. "Immigration amnesties in the southern EU member states - a challenge for the entire EU?," Working Papers CIE 6, Paderborn University, CIE Center for International Economics.
    16. Saibal Kar & Hamid Beladi, 2017. "A Model of Smuggling and Trafficking of Illegal Immigrants with a Host Country Policy," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 698-712, August.
    17. Djajic, Slobodan & Mesnard, Alice, 2014. "Guest Workers in the Underground Economy," CEPR Discussion Papers 10074, C.E.P.R. Discussion Papers.
    18. Slobodan Djajić & Alexandra Vinogradova, 2019. "Immigration Policies and the Choice between Documented and Undocumented Migration," Economica, London School of Economics and Political Science, vol. 86(341), pages 201-228, January.
    19. Karlson, Stephen H. & Katz, Eliakim, 2003. "A positive theory of immigration amnesties," Economics Letters, Elsevier, vol. 78(2), pages 231-239, February.
    20. Magris, Francesco & Russo, Giuseppe, 2016. "Fiscal Revenues and Commitment in Immigration Amnesties," European Journal of Political Economy, Elsevier, vol. 42(C), pages 75-90.

    More about this item

    JEL classification:

    • 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
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:jeurec:v:4:y:2006:i:6:p:1085-1111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.