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Illegal Immigration and the Shadow Economy

Carmen Camacho (), Fabio Mariani () and Luca Pensieroso ()

No 2015014, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We build a general equilibrium model in which both illegal immigration and the size of the informal sector are endogenously determined and interact in a non-trivial way. We show that policy measures such as tax reduction and detection of informal activities can be used as substitutes for border enforcement, in order to contrast illegal immigration. In our framework, a welfare-maximising Government will never choose to drive illegal immigration to zero, but will set the tax rate to a lower value if it includes illegal immigration in its objective function.

Keywords: Illegal immigration; Clandestine workers; Informal sector; Shadow economy; Black market; Taxation; Immigration policy (search for similar items in EconPapers)
JEL-codes: O17 F22 J61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue and nep-mig
Date: 2015-06-29
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http://sites.uclouvain.be/econ/DP/IRES/2015014.pdf (application/pdf)

Related works:
Journal Article: Illegal immigration and the shadow economy (2017) Downloads
Working Paper: Illegal Immigration and the Shadow Economy (2015) Downloads
Working Paper: Illegal Immigration and the Shadow Economy (2015) Downloads
Working Paper: Illegal Immigration and the Shadow Economy (2015) Downloads
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