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Illegal Immigration in a Heterogeneous Society

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  • Theodore Palivos
  • Chong K. Yip

Abstract

This paper examines the effects of illegal immigration in a neoclassical growth model with two groups of workers, skilled and unskilled. We show that although illegal immigration is a boon to a country as a whole, there are distributional effects, whose sign is in general ambiguous. This is because all sources of income of both groups are affected and some of these changes tend to move income in opposite directions. Nevertheless, a calibration exercise shows that the wealth distribution is likely to become more unequal as the number of illegal immigrants increases. We confirm most of our calibration results analytically in a small open economy version of the basic model.
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Suggested Citation

  • Theodore Palivos & Chong K. Yip, 2007. "Illegal Immigration in a Heterogeneous Society," Departmental Working Papers _188, Chinese University of Hong Kong, Department of Economics.
  • Handle: RePEc:chk:cuhked:_188
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    References listed on IDEAS

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    1. Bharat R. Hazari & Pasquale M. Sgro, 2000. "Illegal Migration, Border Enforcement, and Growth," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 258-267, October.
    2. Hazari, Bharat R. & Sgro, Pasquale M., 2003. "The simple analytics of optimal growth with illegal migrants," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 141-151, October.
    3. Djajic, Slobodan, 1987. "Illegal aliens, unemployment and immigration policy," Journal of Development Economics, Elsevier, vol. 25(1), pages 235-249, February.
    4. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-397, July.
    5. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, vol. 81(2), pages 500-513, December.
    6. Kenji Kondoh, 2004. "International immigration and economic welfare in an efficiency wage model: The co-existence case of both legal and illegal foreign workers," Pacific Economic Review, Wiley Blackwell, vol. 9(1), pages 1-12, February.
    7. Ethier, Wilfred J, 1986. "Illegal Immigration," American Economic Review, American Economic Association, vol. 76(2), pages 258-262, May.
    8. Chatterjee, Satyajit, 1994. "Transitional dynamics and the distribution of wealth in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 54(1), pages 97-119, May.
    9. Chatterjee, Satyajit & Ravikumar, B., 1999. "Minimum Consumption Requirements: Theoretical And Quantitative Implications For Growth And Distribution," Macroeconomic Dynamics, Cambridge University Press, vol. 3(04), pages 482-505, December.
    10. Gang, Ira N & Rivera-Batiz, Francisco L, 1994. "Labor Market Effects of Immigration in the United States and Europe: Substitution vs. Complementarity," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(2), pages 157-175.
    11. Moy, Hon Man & Yip, Chong K., 2006. "The simple analytics of optimal growth with illegal migrants: A clarification," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2469-2475, December.
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    Cited by:

    1. Carmelo Pierpaolo Parello, 2012. "Indeterminacy in a Dynamic Small Open Economy with International Migration," Working Papers 159, University of Rome La Sapienza, Department of Public Economics.
    2. Maria Sarigiannidou & Theodore Palivos, 2012. "A Modern Theory of Kuznets’ Hypothesis," Working Papers 201202, Texas Christian University, Department of Economics.
    3. Liu, Xiangbo, 2010. "On the macroeconomic and welfare effects of illegal immigration," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2547-2567, December.
    4. Liu, Xiangbo, 2009. "On the Macroeconomic and Welfare Effects of Illegal Immigration," MPRA Paper 15469, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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