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Welfare effects of illegal immigration

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  • Theodore Palivos
Abstract
This paper analyzes the welfare effect of illegal immigration on the host country within a dynamic general equilibrium framework and shows that it is positive for two reasons. First, immigrants are paid less than their marginal product and second, following an increase in immigration, domestic households find it optimal to increase their holdings of capital. It is also shown that dynamic inefficiency may arise, despite the fact that the model is of the Ramsey type. Nevertheless, the introduction of a minimum wage, which leads to job competition between domestic unskilled workers and immigrants reverses all of the above results.
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Suggested Citation

  • Theodore Palivos, 2009. "Welfare effects of illegal immigration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(1), pages 131-144, January.
    • Handle: RePEc:spr:jopoec:v:22:y:2009:i:1:p:131-144
    DOI: 10.1007/s00148-007-0182-3
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    1. Hazari, Bharat R. & Sgro, Pasquale M., 2003. "The simple analytics of optimal growth with illegal migrants," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 141-151, October.
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    Cited by:

    1. Alberto Petrucci, 2015. "Deviating from the Friedman Rule: A Good Idea with Illegal Immigration?," Working Papers CELEG 1502, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    2. Mayr, Karin & Minter, Steffen & Krieger, Tim, 2012. "Policies on illegal immigration in a federation," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 153-165.
    3. Aleksandra Vasilyeva, 2017. "The Forecast of Labour Migration, Reproduction of the Population and Economic Development of Russia," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 812-826.
    4. Ioana Viasu, 2014. "Migrant Labor, Unemployment and Optimal Growth," Computational Methods in Social Sciences (CMSS), "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 2(2), pages 30-38, December.
    5. Subhayu Bandyopadhyay & Dustin Chambers & Jonathan Munemo, 2012. "Foreign aid, illegal immigration, and host country welfare," Working Papers 2012-007, Federal Reserve Bank of St. Louis.
    6. Aleksandr Tarasyev, 2013. "Construction of the migration flows forecasting into Russian regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 193-199.
    7. Andri Chassambouli & Giovanni Peri, 2015. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 792-821, October.
    8. Chassamboulli, Andri & Palivos, Theodore, 2010. ""Give me your Tired, your Poor," so I can Prosper: Immigration in Search Equilibrium," MPRA Paper 32379, University Library of Munich, Germany.
    9. Carmelo Pierpaolo Parello, 2022. "Migration and growth in a Schumpeterian growth model with creative destruction [A model of growth through creative destruction]," Oxford Economic Papers, Oxford University Press, vol. 74(4), pages 1139-1166.
    10. Andri Chassamboulli & Theodore Palivos, 2014. "A Search‐Equilibrium Approach To The Effects Of Immigration On Labor Market Outcomes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 111-129, February.
    11. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
    12. Devadoss, Stephen & Luckstead, Jeff, 2017. "Immigration Policies and Farm Labor," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258435, Agricultural and Applied Economics Association.
    13. Andri Chassamboulli & Xiangbo Liu, 2024. "Immigration, Legal Status and Fiscal Impact," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 54, October.
    14. Daniel Albalate & Germà Bel & Ferran A. Mazaira‐Font, 2022. "Geography and regional economic growth: The high cost of deviating from nature," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 360-388, March.
    15. Aleksandra Vasilyeva & Aleksandr Tarasyev, 2014. "Future Development Of Migration Processes And Labour Market In The Regions Of Russia," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 283-298.
    16. Xiangbo Liu & Theodore Palivos & Xiaomeng Zhang, 2017. "Immigration, Skill Heterogeneity, And Qualification Mismatch," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1231-1264, July.
    17. Subhayu Bandyopadhyay & Dustin Chambers & Jonathan Munemo, 2014. "Special Issue: Issues in Asia. Guest Editor: Laixun Zhao," Review of Development Economics, Wiley Blackwell, vol. 18(2), pages 372-385, May.
    18. Maria O. Kakaulina, 2019. "Budget Tax Revenues and Losses from External Labor Migration in Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 5(3), pages 190-203.
    19. Carmelo Pierpaolo Parello, 2012. "Indeterminacy in a Dynamic Small Open Economy with International Migration," Working Papers in Public Economics 159, Department of Economics and Law, Sapienza University of Roma.
    20. Jesús Clemente & Gemma Larramona, 2012. "Can a legalization programme for immigrants generate conflict among natives?," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 11, pages 365-386, Edward Elgar Publishing.
    21. Liu, Xiangbo, 2010. "On the macroeconomic and welfare effects of illegal immigration," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2547-2567, December.
    22. Maria O. Kakaulina, 2016. "Evaluation of admissibility tax burden in Crimea and Sevastopol," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 2(2), pages 139-153.
    23. Theodore Palivos & Chong Yip, 2010. "Illegal immigration in a heterogeneous labor market," Journal of Economics, Springer, vol. 101(1), pages 21-47, September.

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    More about this item

    Keywords

    Economic growth; Illegal immigration; F2; O4;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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