The Global Welfare Effects of Illegal Immigration in the Presence of Capital Mobility
Using the Bond and Chen (1987) model of illegal immigration, we re-examine the effects of internal enforcement by the host country’s government on the welfare of the host (labor-importing) country, the foreign (labor-exporting) country and the world, when capital is internationally mobile between countries. Our main result is that the internal enforcement policy increases the foreign country’s welfare and global welfare and, under certain conditions, increases the host country’s welfare. Therefore, we conclude that enforcement is a Pareto-improving policy potentially.
KeywordsHost Country Foreign Country Domestic Firm Capital Mobility Illegal Immigration
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