Immigrants, legal status, and illegal trade

Brett McCully

Journal of International Economics, 2024, vol. 152, issue C

Abstract: Nearly $2 trillion of illegally trafficked goods flow across international borders every year, generating violence and other social costs along the way. Due to the absence of legal contracts and the challenge of finding trading partners in an illegal market, traffickers may rely on co-ethnic networks to facilitate trade. In this paper, I use novel microdata on the universe of large illegal drug confiscations in Spain to provide the first causal estimates of how immigrants and immigration policy affect the pattern and scale of illegal drug trafficking. I find that immigrants increase both illegal drugs imported from and exported to their origin country, with irregular immigrants raising illegal drug imports. Doubling the number of immigrants from an origin country raises the likelihood of illegal drug imports from that country by 8 percentage points. I find suggestive evidence that granting legal status to immigrants reduces illegal drug imports.

Keywords: Immigration policy; Social networks; Drug trafficking (search for similar items in EconPapers)
Date: 2024
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Working Paper: Immigrants, Legal Status, and Illegal Trade (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:152:y:2024:i:c:s0022199624001430

DOI: 10.1016/j.jinteco.2024.104016

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