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Spending more is spending less: on the desirability of enforcing migration

  • Alessandra Casarico

    ()

    (Universita Bocconi, CES-Ifo, Econpubblica and LdA)

  • Giovanni Facchini

    ()

    (Erasmus University Rotterdam, Universita degli Studi di Milano, CEPR, CES-Ifo, CReAM, IZA and LdA)

  • Tommaso Frattini

    ()

    (Universita' degli Studi di Milano, CReAM, IZA, and LdA)

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 Norface Research Programme on Migration, Department of Economics, University College London in its series Norface Discussion Paper Series with number 2012006.

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Date of creation: Jan 2012
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Handle: RePEc:nor:wpaper:2012006
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  1. Timothy Hatton, 2008. "The Rise and Fall of Asylum: What Happened and Why?," CEPR Discussion Papers 577, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Kossoudji, S.A. & Cobb-Clark, D.A., 1996. "Coming Out of the Shadows: Learning About Legal Status and Wages from the Legalized Population," CEPR Discussion Papers 347, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. 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.
  4. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics 2122, London School of Economics and Political Science, LSE Library.
  5. Tito Boeri, 2009. "Immigration to the land of redistribution," LSE Research Online Documents on Economics 53364, London School of Economics and Political Science, LSE Library.
  6. 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.
  7. 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.
  8. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," NBER Working Papers 12141, National Bureau of Economic Research, Inc.
  9. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, 08.
  10. Facchini, Giovanni & Testa, Cecilia, 2014. "The Rhetoric of Closed Borders: Quotas, Lax Enforcement and Illegal Migration," IZA Discussion Papers 8457, Institute for the Study of Labor (IZA).
  11. Stephen Karlson & Eliakim Katz, 2010. "Immigration amnesties," Applied Economics, Taylor & Francis Journals, vol. 42(18), pages 2299-2315.
  12. 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.
  13. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer, vol. 12(1), pages 91-116.
  14. 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.
  15. Karlson, Stephen H. & Katz, Eliakim, 2003. "A positive theory of immigration amnesties," Economics Letters, Elsevier, vol. 78(2), pages 231-239, February.
  16. Pia Orrenius & Madeline Zavodny, 2003. "Do amnesty programs reduce undocumented immigration? Evidence from Irca," Demography, Springer, vol. 40(3), pages 437-450, August.
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