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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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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. Boeri, Tito, 2009. "Immigration to the Land of Redistribution," IZA Discussion Papers 4273, Institute for the Study of Labor (IZA).
  2. Giovanni Facchini & Cecilia Testa, 2010. "The rhetoric of closed borders: quotas, lax enforcement and illegal migration," Norface Discussion Paper Series 2010001, Norface Research Programme on Migration, Department of Economics, University College London.
  3. Hatton, Timothy J., 2008. "The Rise and Fall of Asylum: What Happened and Why?," CEPR Discussion Papers 6752, C.E.P.R. Discussion Papers.
  4. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. Christian Dustmann & Tommaso Frattini, 2011. "Immigration: The European Experience," CReAM Discussion Paper Series 1122, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  10. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 2002. "Tax burden and migration: a political economy theory and evidence," Journal of Public Economics, Elsevier, vol. 85(2), pages 167-190, August.
  11. Pia Orrenius & Madeline Zavodny, 2003. "Do amnesty programs reduce undocumented immigration? Evidence from Irca," Demography, Springer, vol. 40(3), pages 437-450, August.
  12. Karlson, Stephen H. & Katz, Eliakim, 2003. "A positive theory of immigration amnesties," Economics Letters, Elsevier, vol. 78(2), pages 231-239, February.
  13. 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.
  14. Stephen Karlson & Eliakim Katz, 2010. "Immigration amnesties," Applied Economics, Taylor & Francis Journals, vol. 42(18), pages 2299-2315.
  15. 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.
  16. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, 08.
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