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Unauthorized Immigration and Fiscal Competition

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  • Subhayu Bandyopadhyay
  • Santiago Pinto

Abstract

Reflecting upon recent enforcement policy activism of US states and countries within the EU towards unauthorized workers, we examine the overlap of centralized (federal) and decentralized (state or regional) enforcement of immigration policies in a spatial context. Among other results, we find that if interstate mobility is costless, internal enforcement is overprovided, and border enforcement and local goods are underprovided when regions take more responsibility in deciding policies. This leads to higher levels of unauthorized immigration under decentralization. Interregional migration costs moderate such over-underprovision. Moreover, income distributive motives in the host country may shape the design of immigration policies in specific ways. The basic model is extended in several ways. First, we study how the policies change when regions can exclude unauthorized immigrants from the consuming of regionally provided goods or services. Second, we assume that the potential number of unauthorized immigrants is endogenous. And finally, we examine the effect of considering an alternative spatial configuration that includes border and "interior" regions.

Suggested Citation

  • Subhayu Bandyopadhyay & Santiago Pinto, 2014. "Unauthorized Immigration and Fiscal Competition," Working Papers 2014-30, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2014-030
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    3. Laudo M Ogura, 2018. "Informality and exogenous regulations in regional economies," Economics Bulletin, AccessEcon, vol. 38(2), pages 892-900.

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    More about this item

    Keywords

    publicly provided local goods; Unauthorized immigration; Border and internal enforcement; Vertical and horizontal externalities;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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