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Unauthorized Immigration and Fiscal Competition

Subhayu Bandyopadhyay () and Santiago Pinto ()

No 2014-30, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Reflecting upon recent enforcement policy activism of US states and countries within the EU towards unauthorized workers, we examine the overlap of centralized (federal) and decentralized (state or regional) enforcement of immigration policies in a spatial context. Among other results, we find that if interstate mobility is costless, internal enforcement is overprovided, and border enforcement and local goods are underprovided when regions take more responsibility in deciding policies. This leads to higher levels of unauthorized immigration under decentralization. Interregional migration costs moderate such over/underprovision. Moreover, income distributive motives in the host country may shape the design of immigration policies in specific ways. The basic model is extended in several ways. First, we study how the policies change when regions can exclude unauthorized immigrants from the consuming of regionally provided goods or services. Second, we assume that the potential number of unauthorized immigrants is endogenous. And finally, we examine the effect of considering an alternative spatial configuration that includes border and “interior" regions.

Keywords: Unauthorized immigration; Vertical and horizontal externalities; Border and internal enforcement; Publicly provided local goods (search for similar items in EconPapers)
JEL-codes: F22 H73 J15 J61 J68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-int, nep-mig and nep-ure
Date: 2014-10-24, Revised 2016-08-02
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