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Welfare effects of illegal immigration

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Abstract

This paper analyzes the welfare effect of illegal immigration on the host country within a dynamic general equilibrium framework and shows that it is positive for two reasons. First, immigrants are paid less than their marginal product and second, following an increase in immigration, domestic households find it optimal to increase their holdings of capital. It is also shown that dynamic inefficiency may arise, despite the fact that the model is of the Ramsey type. Nevertheless, the introduction of a minimum wage, which leads to job competition between domestic unskilled workers and immigrants reverses all of the above results.

Suggested Citation

  • Theodore Palivos, 2007. "Welfare effects of illegal immigration," Discussion Paper Series 2007_01, Department of Economics, University of Macedonia, revised Dec 2007.
    • Handle: RePEc:mcd:mcddps:2007_01
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    1. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, vol. 81(2), pages 500-513, December.
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    11. Eugenia Markova & Barry Reilly, 2007. "Bulgarian Migrant Remittances and Legal Status: Some Micro-Level Evidence from Madrid," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(1), pages 55-69.
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    Cited by:

    1. Alberto Petrucci, 2015. "Deviating from the Friedman Rule: A Good Idea with Illegal Immigration?," Working Papers CELEG 1502, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    2. Carmelo Pierpaolo Parello, 2022. "Migration and growth in a Schumpeterian growth model with creative destruction [A model of growth through creative destruction]," Oxford Economic Papers, Oxford University Press, vol. 74(4), pages 1139-1166.
    3. Andri Chassamboulli & Theodore Palivos, 2014. "A Search‐Equilibrium Approach To The Effects Of Immigration On Labor Market Outcomes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 111-129, February.
    4. Mayr, Karin & Minter, Steffen & Krieger, Tim, 2012. "Policies on illegal immigration in a federation," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 153-165.
    5. Xiangbo Liu & Theodore Palivos & Xiaomeng Zhang, 2017. "Immigration, Skill Heterogeneity, And Qualification Mismatch," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1231-1264, July.
    6. Subhayu Bandyopadhyay & Dustin Chambers & Jonathan Munemo, 2014. "Foreign Aid, Illegal Immigration, and Host Country Welfare," Review of Development Economics, Wiley Blackwell, vol. 18(2), pages 372-385, May.
    7. Maria O. Kakaulina, 2016. "Evaluation of admissibility tax burden in Crimea and Sevastopol," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 2(2), pages 139-153.
    8. Andri Chassamboulli & Theodore Palivos, 2010. "“Give me your Tired, your Poor,” so I can Prosper: Immigration in Search Equilibrium," University of Cyprus Working Papers in Economics 12-2010, University of Cyprus Department of Economics.
    9. Ioana Viasu, 2014. "Migrant Labor, Unemployment and Optimal Growth," Computational Methods in Social Sciences (CMSS), "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 2(2), pages 30-38, December.
    10. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
    11. Devadoss, Stephen & Luckstead, Jeff, 2017. "Immigration Policies and Farm Labor," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258435, Agricultural and Applied Economics Association.
    12. Aleksandra Vasilyeva & Aleksandr Tarasyev, 2014. "Future Development Of Migration Processes And Labour Market In The Regions Of Russia," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 283-298.
    13. Andri Chassambouli & Giovanni Peri, 2015. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 792-821, October.
    14. Maria O. Kakaulina, 2019. "Budget Tax Revenues and Losses from External Labor Migration in Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 5(3), pages 190-203.
    15. Liu, Xiangbo, 2010. "On the macroeconomic and welfare effects of illegal immigration," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2547-2567, December.
    16. Theodore Palivos & Chong Yip, 2010. "Illegal immigration in a heterogeneous labor market," Journal of Economics, Springer, vol. 101(1), pages 21-47, September.
    17. Parello, Carmelo Pierpaolo, 2012. "Indeterminacy in a dynamic small open economy with international migration," MPRA Paper 40013, University Library of Munich, Germany.
    18. Aleksandra Vasilyeva, 2017. "The Forecast of Labour Migration, Reproduction of the Population and Economic Development of Russia," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 812-826.
    19. Andri Chassambouli & Giovanni Peri, 2015. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 792-821, October.
    20. Daniel Albalate & Germà Bel & Ferran A. Mazaira‐Font, 2022. "Geography and regional economic growth: The high cost of deviating from nature," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 360-388, March.
    21. Jesús Clemente & Gemma Larramona, 2012. "Can a legalization programme for immigrants generate conflict among natives?," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 11, pages 365-386, Edward Elgar Publishing.
    22. Aleksandr Tarasyev, 2013. "Construction of the migration flows forecasting into Russian regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 193-199.

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    More about this item

    Keywords

    Economic Growth; Illegal Immigration;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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