Illegal Immigration with Tariff Distortions

Abstract

We construct and analyse a two-country general equilibrium model in which the home and foreign countries trade two final goods, and legal immigration is restricted. International trade is distorted via tariffs imposed by both countries. Foreign migrants attempt illegal entry to the home country but face a probability of detection and arrest by border patrol of the home country. We examine how stricter border patrol affects the level of illegal immigration, establish conditions under which stricter border patrol reduces successful illegal immigration and determine the welfare implications of this policy change. We also determine the effects on illegal immigration and the welfare of all agents when illegal immigrants increase remittances back to the source country. JEL Codes: F13, F16, F22.