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The Labor Market Effects of Reducing the Number of Illegal Immigrants

Author

Listed:
  • Andri Chassamboulli

    (University of Cyprus)

  • Giovanni Peri

    (UC Davis)

Abstract

A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the period 2000-2010. As immigrants, especially illegal ones, have a worse outside option than natives their wages are lower. Hence their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effect our model shows that increasing deportation rates and tightening border control weakens the low-skilled labor markets, increasing unemployment of native low skilled. Legalization, instead decreases the unemployment rate of low-skilled natives and it increases income per native.

Suggested Citation

  • Andri Chassamboulli & Giovanni Peri, 2015. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," CReAM Discussion Paper Series 1506, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:1506
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    job creation; search costs; illegal immigrants; border controls; deportations; legalization; unemployment; wages;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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