Illegal Migration and Consumption Behavior of Immigrant Households

71 Pages Posted: 11 Jul 2016

See all articles by Christian Dustmann

Christian Dustmann

University College London; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Francesco Fasani

Queen Mary, University of London

Biagio Speciale

Paris School of Economics (PSE)

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Abstract

We analyze the effect of immigrants' legal status on their consumption behavior using unique survey data that samples both documented and undocumented immigrants. To address the problem of sorting into legal status, we propose two alternative identification strategies as exogenous source of variation for current legal status: First, transitory income shocks in the home country, measured as rainfall shocks at the time of emigration. Second, amnesty quotas that grant legal residence status to undocumented immigrants. Both sources of variation create a strong first stage, and – although very different in nature – lead to similar estimates of the effects of illegal status on consumption, with undocumented immigrants consuming about 40% less than documented immigrants, conditional on background characteristics. Roughly one quarter of this decrease is explained by undocumented immigrants having lower incomes than documented immigrants. Our findings imply that legalization programs may have a potentially important effect on immigrants' consumption behavior, with consequences for both the source and host countries.

Keywords: consumption behavior, weather shocks, legal status

JEL Classification: F22, D12, K42

Suggested Citation

Dustmann, Christian and Fasani, Francesco and Speciale, Biagio, Illegal Migration and Consumption Behavior of Immigrant Households. IZA Discussion Paper No. 10029, Available at SSRN: https://ssrn.com/abstract=2807267

Christian Dustmann (Contact Author)

University College London ( email )

Gower Street
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Institute for Fiscal Studies (IFS)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Francesco Fasani

Queen Mary, University of London ( email )

Biagio Speciale

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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