 Immigration, Legal Status and Fiscal ImpactAndri Chassamboulli and Xiangbo Liu University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics Abstract: How do legal and illegal immigrants affect the fiscal balance and welfare of natives in the host country? To answer this question we develop a general equilibrium model with search frictions in the labor market that accounts for both the direct net contribution of immigrants to the fiscal balance and their indirect fiscal effects through their labor market impact. We calibrate the model to the US economy and find that legal immigrants increase native welfare, mainly due to their positive direct net contribution to the fiscal balance. On the other hand, illegal immigrants' positive welfare impact stems mainly from their positive effect on job creation, which helps improve the fiscal balance, but also increases income to natives and in turn consumption. A legalization program leads to a fiscal gain and increases native welfare and it is more beneficial to the host country's citizens than a purely restrictive immigration policy that reduces the illegal immigrant population. Keywords: Immigration; Search Frictions; Fiscal Impact; Welfare; Job creation; Immigration Policies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:07-2020 Access Statistics for this paper More papers in University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics |
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