| Abstract: | Barriers to immigration of low‐skilled workers from developing countries into the advanced countries prevent many potential migrants from leaving their countries of origin. With very low home‐country wages in relation to the cost of undocumented migration, the opportunity to migrate often hinges on the possibility of obtaining credit from a human smuggling organization or family and friends. This paper examines the conditions under which migration is optimal for an individual who lacks liquid assets, with a focus on alternative options for financing migration costs. One is by accumulating the required amount of savings out of source‐country income, with or without financial support from the family or social network. The other is debt‐bonded migration, which involves borrowing from a smuggling organization and paying off the loan while working in the host country. I find that greater financial support from the family network increases the attractiveness of debt‐bonded relative to self‐financed migration. |
