Spending More is Spending Less: Policy Dilemmas on Irregular Migration

48 Pages Posted: 9 May 2012

See all articles by Alessandra Casarico

Alessandra Casarico

Bocconi University - Department of Policy Analysis and Public Management

Giovanni Facchini

University of Milan - Centro Studi Luca d'Agliano (LdA)

Tommaso Frattini

University of Milan - Centro Studi Luca d'Agliano (LdA); University of Milan - Department of Economics, Business and Statistics

Date Written: March 26, 2012

Abstract

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 heterogeneous 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 byt helegalization, 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.

Keywords: Illegal immigration, Immigration Policy, Amnesties, Labor market mismatch

JEL Classification: F22, J61

Suggested Citation

Casarico, Alessandra and Facchini, Giovanni and Frattini, Tommaso, Spending More is Spending Less: Policy Dilemmas on Irregular Migration (March 26, 2012). Centro Studi Luca d'Agliano Development Studies Working Paper No. 330. Available at SSRN: https://ssrn.com/abstract=2054753 or http://dx.doi.org/10.2139/ssrn.2054753

Alessandra Casarico (Contact Author)

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Giovanni Facchini

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via P. Amedeo 34
Milano, 20122
Italy

Tommaso Frattini

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via P. Amedeo 34
Milano, Mi 20122
Italy

University of Milan - Department of Economics, Business and Statistics ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

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