Liquidity-constrained migrants

Slobodan Djajić and Alexandra Vinogradova

Journal of International Economics, 2014, vol. 93, issue 1, 210-224

Abstract: Liquidity constraints represent a major obstacle for potential migrants trying to meet the high cost of undocumented international migration. Some cover it by borrowing from a smuggling organization with a commitment to repay the loan by working in the destination country as bonded laborers. This paper compares alternative ways of financing migration and shows that debt bondage is optimal only if the international wage differential is sufficiently large in relation to migration costs. Tougher border controls as well as internal enforcement measures can be expected to reduce the incidence of debt-bonded relative to self-financed migration, although they may not necessarily lower the overall inflow of illegal aliens.

Keywords: Liquidity constraints; Bonded labor; Illegal immigration; Human smuggling (search for similar items in EconPapers)
JEL-codes: F22 J61 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:93:y:2014:i:1:p:210-224

DOI: 10.1016/j.jinteco.2014.02.004

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