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The Labor Market Effects of Reducing the Number of Illegal Immigrants

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  • Andri Chassamboulli
  • Giovanni Peri

Abstract

A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the period 2000-2010. As immigrants, especially illegal ones, have a worse outside option than natives their wages are lower. Hence their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effect our model shows that increasing deportation rates and tightening border control weakens the low-skilled labor markets, increasing unemployment of native low skilled. Legalization, instead decreases the unemployment rate of low-skilled natives and it increases income per native.

Suggested Citation

  • Andri Chassamboulli & Giovanni Peri, 2014. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," NBER Working Papers 19932, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19932
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    References listed on IDEAS

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    1. Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," Finnish Economic Papers, Finnish Economic Association, vol. 24(1), pages 1-32, Spring.
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    9. Francesco D'Amuri & Giovanni Peri, 2016. "Immigration, Jobs, And Employment Protection: Evidence From Europe Before And During The Great Recession," World Scientific Book Chapters,in: The Economics of International Migration, chapter 5, pages 153-185 World Scientific Publishing Co. Pte. Ltd..
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Migration and democracy
      by nawmsayn in ZeeConomics on 2014-03-06 02:44:19

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    Cited by:

    1. Michele Battisti & Gabriel Felbermayr & Giovanni Peri & Panu Poutvaara, 2014. "Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare," NBER Working Papers 20131, National Bureau of Economic Research, Inc.
    2. repec:wbk:wbpubs:28342 is not listed on IDEAS
    3. Simone Cremaschi & Carlo Devillanova, 2016. "Immigrants and Legal Status: Do Personal Contacts Matter?," CReAM Discussion Paper Series 1629, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    4. repec:bla:ecinqu:v:55:y:2017:i:3:p:1231-1264 is not listed on IDEAS
    5. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    6. East, Chloe N. & Luck, Philip & Mansour, Hani & Velasquez, Andrea, 2018. "The Labor Market Effects of Immigration Enforcement," IZA Discussion Papers 11486, Institute for the Study of Labor (IZA).
    7. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, Elsevier.
    8. Moreno-Galbis, Eva & Tritah, Ahmed, 2016. "The effects of immigration in frictional labor markets: Theory and empirical evidence from EU countries," European Economic Review, Elsevier, vol. 84(C), pages 76-98.
    9. Braun, Sebastian & Weber, Henning, 2016. "How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany," Kiel Working Papers 2025, Kiel Institute for the World Economy (IfW).
    10. Alexander M. Danzer & Barbara Dietz, 2018. "Getting Incentives Right: The economic and social determinants of migrants’ well-being during the global financial crisis," Working Papers 371, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    11. Cords, Dario & Prettner, Klaus, 2018. "Technological unemployment revisited: Automation in a search and matching framework," Hohenheim Discussion Papers in Business, Economics and Social Sciences 19-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    12. Casarico, Alessandra & Facchini, Giovanni & Frattini, Tommaso, 2018. "What drives the legalization of immigrants? Evidence from IRCA," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 258-273.
    13. Devillanova, Carlo & Fasani, Francesco & Frattini, Tommaso, 2014. "Employment of Undocumented Immigrants and the Prospect of Legal Status: Evidence from an Amnesty Program," IZA Discussion Papers 8151, Institute for the Study of Labor (IZA).
    14. Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2018. "Dealing with Illegal Immigration: the Role of Informality, Taxation and Trade," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2018007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Danzer, Alexander M. & Dietz, Barbara, 2018. "The Economic and Social Determinants of Migrants' Well-Being during the Global Financial Crisis," IZA Discussion Papers 11272, Institute for the Study of Labor (IZA).
    16. Mangin, Sephorah & Zenou, Yves, 2016. "Illegal migration and policy enforcement," Economics Letters, Elsevier, vol. 148(C), pages 83-86.
    17. Christoph Albert, 2017. "The Labor Market Impact of Undocumented Immigrants: Job Creation vs. Job Competition," CESifo Working Paper Series 6575, CESifo Group Munich.
    18. Fusshoeller, Chantal & Balleer, Almut, 2017. "Migration and investment: a business cycle perspective," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168125, Verein für Socialpolitik / German Economic Association.
    19. Orrenius, Pia M. & Zavodny, Madeline, 2016. "Irregular immigration in the European Union," Working Papers 1603, Federal Reserve Bank of Dallas.
    20. repec:spr:jlabre:v:39:y:2018:i:2:d:10.1007_s12122-018-9266-y is not listed on IDEAS
    21. Eric Schuss, 2017. "Substantial Labor Market Effects of the Residency Status: How Important Are Initial Conditions at Arrival for Immigrants?," SOEPpapers on Multidisciplinary Panel Data Research 952, DIW Berlin, The German Socio-Economic Panel (SOEP).
    22. 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.
    23. Jason Anastasopoulos & George J. Borjas & Gavin G. Cook & Michael Lachanski, 2018. "Job Vacancies and Immigration: Evidence from Pre- and Post-Mariel Miami," NBER Working Papers 24580, National Bureau of Economic Research, Inc.
    24. repec:eee:jmacro:v:52:y:2017:i:c:p:118-134 is not listed on IDEAS

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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