Government policy under price uncertainty: A source of volatility in illegal immigration

Mark Guzman, Joseph H. Haslag and Pia Orrenius

Canadian Journal of Economics, 2015, vol. 48, issue 3, 940-962

Abstract: This paper provides an alternative explanation for why illegal immigration can exhibit substantial volatility. We develop a model economy where migrants make decisions in the face of uncertain border enforcement and transfers from the host country. The uncertainty is extrinsic, a sunspot, and arises due to ambiguity regarding government policy; the sunspot manifests itself as uncertainty in the commodity price of money. Immigration volatility stems from both the trade-off between the marginal benefits and costs (transfers and enforcement) to migrating and the existence of a sunspot. Finally, we examine the impact of changes in government policies on migration levels.

JEL-codes: E62 (search for similar items in EconPapers)
Date: 2015
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Related works:
Journal Article: Government policy under price uncertainty: A source of volatility in illegal immigration (2015)
Working Paper: Government Policy under Price Uncertainty: A Source of Volatility in Illegal Immigration (2013)
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