Illegal Immigration: Optimal Enforcement and Capital Mobility
This paper analyzes the effectiveness of enforcement in controlling illegal immigration in two scenarios, capital mobility and capital immobility in the host nation (for illegal immigrants). The source nation is assumed throughout to have immobility of capital. We show that the net enforcement expenditure is higher (lower) in the presence of capital mobility if the host nation is an importer (exporter) of capital at the target immigration level. Furthermore, we show that if the host nation is an exporter of capital at the point of zero enforcement (unrestricted immigration), it must have lower enforcement expenditure (compared to capital immobility) for any illegal immigration target. If it is an importer of capital at zero enforcement, there is some ambiguity. National income must be higher (lower) under capital mobility (compared to immobility) if the host nation is an importer (exporter) of capital at the target immigration level. The analysis is extended to consider endogenous determination of optimal immigration level. Under capital mobility, for a capital exporting nation, the optiaml enforcement and the national income levels are higher, whil the optiamal immigration level is lower.
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