The Global Welfare of Illegal Immigration in the Presence of Capital Mobility

The Global Welfare of Illegal Immigration in the Presence of Capital Mobility

Using the Bond and Chen [1987] model on illegal immigration, we newly examine the effects of internal enforcement by host country`s government on labor-importing country, labor-exporting country and global welfare when capital is allowed to be internationally mobile between a home and a foreign countries. The main results we obtain are that an imposition of the enforcement makes the labor-importing country`s welfare better off under some circumstances and the labor-exporting country`s welfare better off as well, and hence improves the global welfare. Therefore, we can conclude that the enforcement is a Pareto-improving-policy. (JEL Classification No.: F21; F22)