Smuggling Humans: A Theory of Debt-Financed Migration
IZA Discussion Paper No. 1025
30 Pages Posted: 10 Feb 2004
There are 2 versions of this paper
Smuggling Humans: A Theory of Debt-Financed Migration
Smuggling Humans: A Theory of Debt-Financed Migration
Date Written: February 2004
Abstract
We introduce financial constraints in a theoretical analysis of illegal immigration. Intermediaries finance the migration costs of wealth-constrained migrants, who enter temporary servitude contracts to pay back the debt. These debt/labor contracts are more easily enforceable in the illegal than in the legal sector of the host country. Hence, when moving from the illegal to the legal sector becomes more costly, for instance, because of stricter deportation policies, fewer immigrants default on debt. This reduces the risks for intermediaries, who are then more willing to finance illegal migration. Stricter deportation policies may thus increase rather than decrease the ex ante flow of illegal migrants. We also show that stricter deportation policies worsen the skill composition of immigrants. While stricter border controls decrease overall immigration, they may also result in an increase of debt-financed migration.
Keywords: Illegal migration, wealth constraints, indentured servitude, financial contracting
JEL Classification: O15, O17, J61, N21
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Smuggling Humans: A Theory of Debt-Financed Migration
By Guido Friebel and Sergei Guriev
-
A Theory of Immigration Amnesties
By Gil S. Epstein and Avi Weiss
-
A Theory of Immigration Amnesties
By Gil S. Epstein and Avi Weiss