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Illegal immigration and the shadow economy

Author

Listed:
  • Carmen Camacho

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Fabio Mariani

    (UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain, IZA - Institute for the Study of Labor - Institute for the Study of Labor (IZA) Bonn)

  • Luca Pensieroso

    (UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain)

Abstract

We build a model in which both illegal immigration and the size of the informal sector are endogenously determined. In this framework, we show that indirect policy measures such as tax reduction and detection of informal activities can be used as substitutes for border enforcement, in order to counteract illegal immigration. We also find that a welfare-maximizing government will set the tax rate to a lower value, if it includes illegal immigration in its objective function, instead of focusing on the well-being of native workers only.

Suggested Citation

  • Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2017. "Illegal immigration and the shadow economy," PSE-Ecole d'économie de Paris (Postprint) halshs-03968483, HAL.
    • Handle: RePEc:hal:pseptp:halshs-03968483
    DOI: 10.1007/s10797-017-9444-5
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03968483v1
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    Cited by:

    1. Vicente Ríos & Antonio Gómez & Pedro Pascual, 2021. "Raising the Accuracy of Shadow Economy Measurements," Hacienda Pública Española / Review of Public Economics, IEF, vol. 239(4), pages 71-125, November.
    2. Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2018. "Dealing with Illegal Immigration: the Role of Informality, Taxation and Trade," LIDAM Discussion Papers IRES 2018007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Mamadou Lah, 2024. "The Economics of the Informal Sector: New Estimates, New Implications for OECD countries," PSE Working Papers halshs-04721526, HAL.
    4. Friedrich Schneider & Mangirdas Morkunas & Erika Quendler, 2023. "An estimation of the informal economy in the agricultural sector in the EU‐15 from 1996 to 2019," Agribusiness, John Wiley & Sons, Ltd., vol. 39(2), pages 406-447, March.
    5. Mariani, Fabio & Mercier, Marion, 2021. "Immigration and crime: The role of self-selection and institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 538-564.
    6. Barbara Annicchiarico & Claudio Cesaroni, 2018. "Tax reforms and the underground economy: a simulation-based analysis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(2), pages 458-518, April.
    7. Friedrich Schneider & Mangirdas Morkunas & Erika Quendler, 2021. "Measuring the Immeasurable: The Evolution of the Size of Informal Economy in the Agricultural Sector in the EU-15 up to 2019," CESifo Working Paper Series 8937, CESifo.
    8. Pia M. Orrenius & Madeline Zavodny, 2016. "Irregular immigration in the European Union," Working Papers 1603, Federal Reserve Bank of Dallas.
    9. Mangirdas Morkunas, 2022. "Measuring the Level of the Youth Informal Economy in Lithuania in 2004–2020," Economies, MDPI, vol. 10(11), pages 1-13, November.
    10. Giulia Bettin, 2019. "Il valore economico dell?immigrazione," PRISMA Economia - Societ? - Lavoro, FrancoAngeli Editore, vol. 2019(2), pages 12-30.
    11. Sefa Karagoz, 2020. "The Importance of the Informal Economy for Social Policy," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 70(2), pages 479-505, December.
    12. Emanuele Bracco & Luisanna Onnis, 2022. "Immigration, amnesties, and the shadow economy," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1135-1162, October.

    More about this item

    Keywords

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    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • 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

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