A Model of Smuggling and Trafficking of Illegal Immigrants with a Host Country Policy
15 Pages Posted: 7 Jul 2017
Date Written: August 2017
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.
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