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Spending More is Spending Less: Policy Dilemmas on Irregular Migration

  • Alessandra Casarico

    ()

    (Bocconi University, CES-Ifo, Econpubblica and Centro Studi Luca d\'Agliano)

  • Giovanni Facchini

    (Erasmus University Rotterdam, University of Milan, CEPR, CES-Ifo,CReAM, IZA, and LdA)

  • Tommaso Frattini

    (University of Milan, CReAM, IZA and Centro Studi Luca d’Agliano)

We study the migration policy set by a welfare maximizing government in a model where immigrant workers differ in their skills and are imperfectly matched with heterogenous occupations. The policy fixes a minimum skill level for legal migrants, and foreign workers that fall below it can only enter the country illegally. We start by analyzing under which conditions an amnesty is desirable compared to tolerating undocumented immigrants. Next, we study when it is preferable to have ex-ante lax enforcement, rather than to carry out costly enforcement. We show that three channels play an important role in this decision: an amnesty is more likely the larger are the output gains brought about by the legalization, the less redistributive is the welfare state and the higher is the expected cost of criminal activities carried out by illegal immigrants. Importantly, we also find that, when an amnesty is desirable, the destination country would reach an even higher welfare level investing in enforcement ex-ante. Empirical evidence based on a novel panel dataset of legalization programs carried out by a group of OECD countries between 1980-2007 broadly supports the role played by the channels identified in our theoretical model.

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File URL: http://www.dagliano.unimi.it//media/WP2012_330.pdf
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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 330.

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Length: 48
Date of creation: 27 Mar 2012
Date of revision: 27 Mar 2012
Handle: RePEc:csl:devewp:330
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  1. Tito Boeri, 2009. "Immigration to the land of redistribution," LSE Research Online Documents on Economics 53364, London School of Economics and Political Science, LSE Library.
  2. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, 08.
  3. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
  4. Razin, A. & Sadka, E. & Swagel, P., 1998. "Tax Burden and Migration: a Political Economy Theory and Evidence," Papers 15-98, Tel Aviv.
  5. Christian Dustmann & Tommaso Frattini, 2011. "Immigration: The European Experience," Development Working Papers 326, Centro Studi Luca d\'Agliano, University of Milano, revised 27 Dec 2011.
  6. Stephen Karlson & Eliakim Katz, 2010. "Immigration amnesties," Applied Economics, Taylor & Francis Journals, vol. 42(18), pages 2299-2315.
  7. Timothy Hatton, 2008. "The Rise and Fall of Asylum: What Happened and Why?," CEPR Discussion Papers 577, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  8. Facchini, Giovanni & Testa, Cecilia, 2011. "The rhetoric of closed borders: quotas, lax enforcement and illegal migration," CEPR Discussion Papers 8245, C.E.P.R. Discussion Papers.
  9. Karlson, Stephen H. & Katz, Eliakim, 2003. "A positive theory of immigration amnesties," Economics Letters, Elsevier, vol. 78(2), pages 231-239, February.
  10. Kossoudji, S.A. & Cobb-Clark, D.A., 1996. "Coming Out of the Shadows: Learning About Legal Status and Wages from the Legalized Population," CEPR Discussion Papers 347, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  11. Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
  12. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," NBER Working Papers 12141, National Bureau of Economic Research, Inc.
  13. Pia Orrenius & Madeline Zavodny, 2003. "Do amnesty programs reduce undocumented immigration? Evidence from Irca," Demography, Springer, vol. 40(3), pages 437-450, August.
  14. Gil Epstein & Avi Weiss, 2011. "The why, when, and how of immigration amnesties," Journal of Population Economics, Springer, vol. 24(1), pages 285-316, January.
  15. Chau, Nancy H, 2001. "Strategic Amnesty and Credible Immigration Reform," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 604-34, July.
  16. Mendes de Oliveira, M. & Santos, M. C. & Kiker, B. F., 2000. "The role of human capital and technological change in overeducation," Economics of Education Review, Elsevier, vol. 19(2), pages 199-206, April.
  17. repec:ner:tilbur:urn:nbn:nl:ui:12-3125517 is not listed on IDEAS
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