Illegal immigration in an efficiency wage model.
This paper studies illegal immigration using an efficiency wage/dual labor market model. The illegal immigrants are endogenously sorted, completely or incompletely, into secondary labor markets. The effects of immigration on native workers are more complex than in standard models of factor mobility. As illegals first enter the country, natives may gain because the number of primary sector jobs rises. With enough illegals in the country, natives are hurt because the migrants increasingly take those primary sector jobs. Enforcing immigration laws by deporting migrants who work in primary sector jobs is Pareto-superior to other forms of enforcement.
Carter, T. J. (1999). Illegal immigration in an efficiency wage model. Journal of International Economics, 49(2), 385-401. doi:10.1016/S0022-1996(98)00069-5
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