A Model of Smuggling and Trafficking of Illegal Immigrants with a Host Country Policy

This paper deals with illegal immigration via two distinct activities—smuggling and trafficking of workers. A destination–source model determines economic pay‐offs and a standard labor market policy works as a deterrent. Tax paid by legal unskilled workers at the destination is determined endogenously and it finances inland monitoring against illegal immigration, holding the border patrol at a given level. The tax also finances unemployment benefit to legal workers at the destination. The number of immigrant smugglers and traffickers is also determined endogenously along with employer penalty and market wage for illegal immigrants. Higher unemployment benefits may reduce illegal wages, raise traffickers’ rent and reduce flow of illegal immigrants from the source countries.     

A theory of permissible illegal immigration

In many countries laws are not enforced against visibly present illegal immigrants. The visibly present illegal immigrants also tend to be concentrated in particular sectors. We explain such permissible illegal immigration in an endogenous-policy model where selective sector-specific illegality transforms illegal immigrants from non-sectorally specialized to sector-specific factors of production. Under initial conditions where no immigrants are present, the median voter opposes immigration. When, however, a population of illegal immigrants has accumulated, ongoing illegal immigration becomes an endogenous equilibrium policy, at the same time that a majority of voters opposes legal immigration and opposes amnesty that would legalize the immigrants' presence. We also establish a basis for domestic voters preferring that illegal immigrants be employed in service rather than traded-goods sectors.     

International immigration and economic welfare in an efficiency wage model: The co-existence case of both legal and illegal foreign workers

Abstract. In the developed countries some native workers are unemployed while there exist illegal unskilled (legal skilled) foreign workers who are complementary to (substitutable for) natives and their wages are usually lower than (equal to) that of natives. Reflecting this situation, we introduce two types of immigrant in an efficiency wage model. It is shown that domestic government should exclude illegal foreign workers but welcome legal ones if the total number of illegal immigrants is small enough and well controlled. On the other hand, legal immigration should be restricted if the flood of illegal immigration is out of control.     

Illegal immigration in the presence of labor unions

"This paper develops a general equilibrium framework of a two-sector economy which incorporates illegal immigration in the presence of labor unions. It demonstrates that stricter enforcement of immigration laws, by reducing the demand for or supply of illegal aliens, benefits all legal workers in the economy. The model is used to evaluate the impact of these policy changes on national income. Results indicate that national income does not necessarily fall when immigration controls are tightened. The existence of a union mitigates the negative welfare impact of a reduction in the number of illegal immigrants."     

An economic model of religious organization under oppressive regulation

This paper aims to explain the behavior of certain religious organizations in countries with severe regulation that limits the religious market, such as those under communist rule. Religious organizations in those countries sometimes choose to operate both legally and illegally. The model proposed here shows that such behavior may increase the consumer welfare of religionists compared to solely legal or illegal provision of religious services. It assumes that religious organizations maximize the consumer surplus of their adherents. The choice of a religious organization between legal and illegal provision of religious services depends on the costs of religious participation imposed by the government and the set-up costs of dual operation. As an illustration, the paper accounts for the different response of the Catholic Church to restrictions imposed by the communists in Poland and Czechoslovakia.     

ECONOMY‐WIDE EFFECTS OF REDUCING ILLEGAL IMMIGRANTS IN U.S. EMPLOYMENT

We use an economy‐wide model to analyze the effects of three broad programs to reduce illegal immigrants in U.S. employment: tighter border security; taxes on employers; and vigorous prosecution of employers. After looking at macroeconomic industry and occupational effects, we decompose the welfare effect for legal residents into six parts covering changes in: producer surplus and illegal wage rates; skilled employment opportunities for natives; aggregate capital; aggregate legal employment; the terms of trade; and public expenditure. The type of program matters. Our analysis suggests a prima facie case in favor of taxes on employers. (JEL J61, C68)     

Is the new immigration less skilled than the old?

This paper analyzes trends in the skills of immigrants to the US in the post-World War II period. Changes in the supply, demand, and institutional factors determining immigration are analyzed for their implications for immigrant skills. During the past 4 decades immigration has shifted from being predominantly European and Canadian in origin to being predominantly Asian and Latin American, and there have been changes in the criteria for rationing immigration visas. Immigrant skills can be analyzed within the context of a model of the supply of immigrants and the US demand for immigrants. Of the Asian immigrants subject to numerical limitation, the proportion who were occupational preference principals declined from 18.2% in 1970, to 11.9% in 1975, to 8.1% in 1981. A growing stock of the foreign-born population who are illegal aliens may lower immigrant quality; for low-skilled workers in neighboring low-income countries the economic incentives for illegal migration are very large. Immigrants from the UK have the highest annual earnings, with Canadian, other European, South Asian, East Asian, and other American immigrants having successively lower earnings. The Mexicans and the Vietnamese have the lowest earnings. Over the period 1950 to 1980, US immigration changed from primarily drawing immigrants from countries whose nationals have high relative earnings in the US primarily drawing immigrants from countries whose nationals do less well. Recent immigrants are less favorably selected on the basis of their level of schooling. The analysis of the relative earnings of immigrants during the 1970s using 3 data files shows there has been little change for white immigrants, an ambiguous pattern for Mexican immgrants, perhaps a small decline for Cuban immigrants, and a small rise for Asian immigrants. Overall, without returning to rationing by country of origin, public policy could raise immigrant skill levels by changing the balance between kinship and the individual's skills in the rationing of visas.     

Simultaneous Estimation of Legal and Illegal Supply and Demand: The Case of Motion Pictures

Prior research into illegal goods has typically looked at one-way effects, such as illegal demand on legal demand. This research investigates a previously unexamined component of the market, illegal supply. The authors examine the supply and demand of legal goods and their illegal counterparts as a market system of four interdependent components. This research makes theoretical and empirical contributions by evaluating illegal supply in this system. Simultaneous equations estimate each market component on the others using data from the motion picture industry. The results find illegal supply has no effect on legal supply (movie screens), positive effects on illegal demand (piracy downloads), and some effect on legal demand (box office revenues). Timing effects highlight this: illegal supply has a positive effect on legal demand during a film’s opening week, but no effect post-launch. The other market components have positive effects on illegal supply (except legal supply, which is negative in the opening week). Additionally, illegal demand has a negative effect on legal demand during the opening week of release, but not in the subsequent weeks. This finding alleviates prior research tension as to whether piracy helps or hurts legal sales, as omitting illegal supply could result in biased estimates.     

Estimating consumer preferences for online music services

This article analyses consumer preferences with regard to important attributes of online music services. Conjoint analysis and a random coefficient discrete choice model using Bayesian approach with Gibbs sampling are used to estimate the preferences. Based on the quantitative results, we use simulation to look at how a new pricing strategy and the threat of legal penalty for file sharing would influence the online music market. Findings include these: estimated willingness to pay for downloading one music file is significantly less than the actual price of the file; consumers are sensitive to longer search and download times for music files and very sensitive to the threat of legal action; and consumers are not sensitive to online music services broadening their catalogues. Finally, the simulation shows that a combination of increased transaction costs for illegal file sharing and lower-priced digital music files would inhibit illegal file sharing and bolster the number of people purchasing music legally from the online services.     

国际贸易投资中的签证壁垒辨析

签证壁垒不属于非关税壁垒,而是服务贸易壁垒中自然人流动壁垒是一种间接但明显的歧视性服务贸易壁垒.由于国家安全、经济利益、非法移民和法律差异等因素,签证壁垒不仅存在,而且不会消除.签证壁垒中的一些偏颇观点需要澄清,以免在寻找解决办法时陷入误区.     

America's post-war immigration policy

This article provides a historical perspective on immigration policy in the US after World War II and assesses the present situation. US immigration and refugee policy has undergone significant change since World War II. The McCarran-Walter Act of 1952, which instituted a system of proportional quotas based on national origins, was discarded in 1965 following years of criticism that it discriminated against nonwhites. Third World immigrants, especially from Asia and the Americas, have benefited from the immigration laws. However, the problems resulting from unrestricted and undifferentiated immigration are now becoming apparent, even to liberal critics of previous national origins policies. During the 1970s, there was a 61% increase in the number of Mexican nationals in the US and Mexicans currently comprise over 20% of the population in 40 Congressional districts in 8 states. 83.3% of legal immigrants, and all illegal immigrants, are of non-European descent--a fact that may retard their assimilation and intensify ethnic tensions. There is a danger that the concept of national borders may become superfluous. The theoreticval liberalism of the 1950s and 1960s is, in the 1970s, being confronted with the reality of large numbers of immigrants unable and unwilling to be absorbed into a previously European-dominated country. It is concluded that the enforced application of the concept of equality in matters of immigration has not been the panacea that its liberal proponents envisioned.     

Intentions to Return of Clandestine Migrants: The Perverse Effect of Illegality on Skills

In this paper we show that highly skilled clandestine migrants are more likely to return home than migrants with low or no skills when illegality causes "skill waste", i.e. when illegality reduces the rate of return of individual capabilities (i.e. skills and human capital) in the country of destination. In a simple life-cycle framework, illegality is modeled as a tax on skills that reduces the opportunity cost of returning home particularly for the highly skilled. This proposition is tested on a sample of apprehended immigrants that unlawfully crossed the Italian borders in 2003. The estimation confirms that the intention to return to the home country is more likely for highly skilled illegal immigrants. The empirical results of this paper attenuate the common wisdom on the return decisions of legal migrants, according to which low-skill individuals are more likely to go back home (mainly because of negative self-selection).     

The case against eliminating large denomination bills

When large denomination bills are preferred in illegal activities, what is the optimal policy response? We construct a dual currency model where illegal activity can be reduced by modifying the payment environment. In our model, legal (goods) traders are indifferent between small and large bills, but illegal (goods) traders face a lower transaction cost of using large bills in comparison to small bills because it is easier to conceal. We show that eliminating large bills can reduce illegal trade and its associated social cost. However, this pooling equilibrium is sub-optimal because the government can collect more seigniorage by allowing illegal traders to use large bills with a lower rate of return. When the transaction cost of using small bills for illegal traders is sufficiently large, a separating equilibrium, where legal traders use small bills and illegal traders use large bills, can maximize welfare by making an implicit transfer from the illegal traders to the legal traders.     

Taxes and culture of leisure: Impact on labor supply in Europe

This paper uses micro data from the European Social Survey to investigate the impact of culture of leisure and taxes on labor force participation and hours worked of second-generation immigrants who reside in 26 European countries. These individuals are born in Europe, and they have been exposed to institutional, legal and labor market structures of their countries, including the tax rates. Their fathers are first-generation immigrants who migrated from 47 different countries. I construct measures of “taste for leisure” in the country of origin of each immigrant father. I employ average and marginal tax rates for each country of residence, and control for individual characteristics, in addition to a large set of attributes of the country of residence and country of origin. I demonstrate that systematic selection of first-generation immigrants (the fathers of the individuals analyzed) to countries of destination based on the tax rates is unlikely. The results show that for women, both taxes and culture of leisure impact labor force participation and hours worked. For men, taxes influence labor supply both at the intensive and the extensive margins, but culture of leisure has no impact. The results are insensitive to the omission of immigrants from Muslim countries.     

Leniency policies and illegal transactions

We study the consequences of leniency—reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers—on sequential, bilateral, illegal transactions, such as corruption, manager–auditor collusion, or drug deals. It is known that leniency helps deterring illegal relationships sustained by repeated interaction. Here we find that—when not properly designed—leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence.     

Corruption,illegal trade and compliance with the Montreal Protocol

This paper studies the effects of corruption, rule of law and tariffs on illegal trade in chlorofluorocarbons (CFCs) controlled by the Montreal Protocol. Since data on illegal trade is not available, it is not possible to test any theoretical conclusions about smuggling. The paper, however, attempts to circumvent the problem by developing a model of illegal trade in CFCs that derives predictions about the effects of corruption, rule of law and tariffs on both legal and illegal imports of CFCs. Then the theoretical predictions concerning legal imports are tested using panel data on CFC consumption. Using the estimates of legal imports, inferences about illegal trade are made. The basic findings indicate that knowledge about the degree of rule of law, corruption and the level of tariffs is needed for the correct interpretation of the data on environmental performance reported to international monitoring agencies.     

The effect of immigrants on natives' incomes through the use of capital

"This paper deals with questions about the effects of immigrants on three types of capital: the private capital immigrants work with, the public (government) capital that immigrant workers use, and the public capital used for services by immigrants." The geographic focus is on the United States. The authors conclude that although the average cost to natives in 1975 dollars to provide services for immigrants is 4,172 dollars, this amount "is considerably smaller than the benefits of immigrants to natives through their relatively low use of welfare services and their relatively high contribution of taxes." Comments by Jacob Mincer (pp. 95-7) are included.     

Intentions to Return of Clandestine Migrants: Comment

We take issue with the reasoning of Coniglio et al. ( 2009 ) that whereas better‐skilled illegal migrants will prefer to return‐migrate, lower‐skilled illegal migrants will not. We argue that under asymmetric information, all the illegal migrants are initially paid a wage based on the average productivity of the group of illegal migrants. The better‐skilled illegal migrants thus face two “taxes:” being paid less than if they were legal, and being averaged down. Therefore, better‐skilled illegal migrants can be expected to expend more effort to become legal than lower‐skilled illegal migrants. And once legalized, there is no reason for the better‐skilled illegal migrants to want to return to their country of origin more than the lower‐skilled illegal migrants. Thus, it is the lower‐skilled illegal migrants that are likely to dominate the return migration flow. We argue that in other respects too, the model of Coniglio et al. is not based on reasonable assumptions, and that even under the postulated assumptions, the model suffers from several inconsistencies. In particular, when the rate of return to savings is an increasing function of skill level, we would expect there to be few better‐skilled individuals among illegal migrants in the first place. Also, an obvious distinction between savers and borrowers is ignored.     

Congestion and Optimal Immigration Policy

This paper presents a model to explain the stylized fact that many countries have a low ratio of migrants in their population while some countries have a high ratio of migrants. Immigration improves the income of the domestic residents, but migrants also increase the congestion of public services. If migrants are unskilled and therefore pay low taxes, and the government does not limit access to these services, then the welfare of the domestic residents decreases with the number of migrants. Visa auctions can lower the cost of immigration control and substitute legal migrants for illegal migrants. If the government decides to limit the access of migrants to public services, immigration control becomes unnecessary and the optimal number of migrants can be very large.     

Promoting entry of high-quality workers through US immigration policy

We examine how US immigrants would be affected by applying a simple point system for admission, as Canada does. Since US immigration policy emphasizes family reunification, immigrants have lower education and earnings than natives, with unauthorized immigrants’ education below legal ones. Using American Community Survey data, and Center for Migration Studies data, which allows us to distinguish legal from unauthorized immigrants, we examine the effects of requiring immigrants to meet 2 of 3 conditions: (1) a high school or college degree, (2) being less than 40 years old and (3) working in a professional occupation, while admitting the same numbers of immigrants. This policy changes the source countries of immigrants and there are large positive effects on immigrant earnings. Immigrants’ use of government transfer programs is reduced to below natives and income inequality falls. Finally, with existing policy, immigrant earnings growth is not enough to overtake natives given immigrants’ entering earnings disadvantage. With this point system, immigrants start at a higher level and surpass natives relatively quickly.