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DEALING WITH UNDOCUMENTED IMMIGRANTS: THE WELFARE EFFECTS OF AMNESTIES AND DEPORTATIONS

Published online by Cambridge University Press:  22 November 2017

Joël Machado*
Affiliation:
Luxembourg Institute of Socio-Economic Research (LISER)
*
Address correspondence to: Joël Machado, LISER, Maison des Sciences Humaines, 11, Porte des Sciences L-4366, Esch-sur-Alzette/Belval, Luxembourg; e-mail: joel.machado@liser.lu.
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Abstract:

The effects on agents’ welfare of two different policies dealing with undocumented immigrants, amnesties and deportations, are assessed. I develop a two-period overlapping generations model which accounts for the ex-ante production by undocumented workers and their impact on the government budget. Additional channels, such as the discrimination on the labor market and a different productivity of regularized workers are discussed. The impact of a migration policy depends on the wage effects of the legalized/deported workers and their net fiscal contribution. The calibration of the model for the United States in 2014 allows to disentangle the channels at work. Overall, the impact of the two policies on natives’ welfare is limited (between −0.1% and +0.15%). Retired agents benefit from an amnesty and are harmed by a deportation. The effect on workers is ambiguous and depends on the wage and fiscal effects in addition to the change in the returns on savings.

Type
Research Papers
Copyright
Copyright © Université catholique de Louvain 2017 

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Footnotes

This paper benefited from the helpful suggestions of three anonymous referees. I am also grateful to Michal Burzynski, David de la Croix, Slobodan Djajic, Frédéric Docquier, Giovanni Facchini, Freddy Heylen, Magnus Lofstrom, Vanessa Lutgen, Ana Maria Mayda, Alice Mesnard, Panu Poutvaara, Hillel Rapoport, Ingmer Schumacher, Thomas Seegmüller, Robert Stelter, and seminar participants for interesting discussions and suggestions. An earlier version was presented at the OLG Days in Vielsalm, the 4th TEMPO conference on International Migration in Nottingham, the PET15 conference in Luxembourg, the RGS/RWI Workshop on the Economics of Immigration 2016, and the Macro-Lunch seminar in Louvain-la-Neuve. The usual disclaimer applies. The author gratefully acknowledges funding by the National Research Fund, Luxembourg (9037210).

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DEALING WITH UNDOCUMENTED IMMIGRANTS: THE WELFARE EFFECTS OF AMNESTIES AND DEPORTATIONS
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