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Guest Workers in the Underground Economy

Author

Listed:
  • Djajic, Slobodan
  • Mesnard, Alice
Abstract
Guest-worker programs have been providing rapidly growing economies with millions of temporary foreign workers over the last couple of decades. With the duration of stay strictly limited by program rules in most of the host countries and wages paid to guest workers often set at sub-market levels, many of the migrants choose to overstay and seek employment in the underground economy. This paper develops a general-equilibrium model that relates the flow of guest workers transiting to the underground economy to the rules of the program, enforcement measures of the host country and market conditions facing migrants at home and abroad.

Suggested Citation

  • Djajic, Slobodan & Mesnard, Alice, 2014. "Guest Workers in the Underground Economy," CEPR Discussion Papers 10074, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10074
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    References listed on IDEAS

    as
    1. Guido Friebel & Sergei Guriev, 2006. "Smuggling Humans: A Theory of Debt-financed Migration," Journal of the European Economic Association, MIT Press, vol. 4(6), pages 1085-1111, December.
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    4. Djajić, Slobodan & Vinogradova, Alexandra, 2013. "Undocumented migrants in debt," Labour Economics, Elsevier, vol. 21(C), pages 15-24.
    5. repec:hal:spmain:info:hdl:2441/ir3267m2793mq59aqoimcu636 is not listed on IDEAS
    6. Frank Bean & B. Lowell & Lowell Taylor, 1988. "Undocumented Mexican immigrants and the earnings of other workers in the United States," Demography, Springer;Population Association of America (PAA), vol. 25(1), pages 35-52, February.
    7. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, vol. 84(1), pages 1-14, May.
    8. Sherrie A. Kossoudji & Deborah A. Cobb-Clark, 2002. "Coming out of the Shadows: Learning about Legal Status and Wages from the Legalized Population," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 598-628, July.
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    11. Slobodan Djajić & Michael S. Michael, 2013. "Guest worker programs: A theoretical analysis of welfare of the host and source countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(3), pages 454-475, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Temporary migration; Undocumented workers; Underground economy;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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