The Optimal Enforcement of Immigration Law

Abstract

Bond and Chen (1987) developed a two-country, one-good, two-factor model of illegal immigration. Bond and Chen concluded that in the absence of capital mobility between the two countries, employer sanctions against home firms knowingly employing illegal foreign workers by a host country’s government might increase the host country’s welfare given certain necessary conditions. We reintroduce the Bond and Chen model utilizing a Cobb-Douglas production function. We find an optimal level of the enforcement for the host country’s welfare when capital is mobile between the countries. The purpose of this chapter is to complement the work of Bond and Chen. When there is capital mobility as well as a tax on home capital located in a foreign country, a distortion exists in equilibrium prior to the introduction of the enforcement. The introduction of the enforcement as a second distortion can increase the host country’s income for some standard second-best reasons.

The chapter was first published in ‘Business & Economics for the 21st Century — Volume III’, ISBN #: 0-9659831-2-9, Library of Congress Catalog Card#: 99-097613, Worcester, MA,USA,1999.