Illegal Immigration and the U.S. Labor Market of the 1990s

Public testimony by Prof. Briggs given before the Subcommittee on Immigration and Claims of the Committee on the Judiciary, House of Representatives, April 5, 1995.

Government policy under price uncertainty: a source of volatility in illegal immigration

In this paper we provide an alternative explanation for why illegal immigration can exhibit substantial fluctuation. We develop a model economy in which migrants make decisions in the face of uncertain border enforcement and lump-sum transfers from the host country. The uncertainty is extrinsic in nature, a sunspot, and arises as a result of ambiguity regarding the commodity price of money. Migrants are restricted from participating in state-contingent insurance markets in the host country, whereas host country natives are not. Volatility in migration flows stems from two distinct sources: the tension between transfers inducing migration and enforcement discouraging it and secondly the existence of a sunspot. Finally, we examine the impact of a change in tax/transfer policies by the government on migration.

Illegal immigration, technology adoption and welfare

A debate in the illegal immigration and technology adoption literature suggests that hiring illegal immigrants may be hindering the adoption of new technology, which in turn harms a country’s productivity growth. This paper analyses an individual firm’s behaviour regarding new technology adoption in the presence of illegal immigrants. We assume a Ricardian economy and analyse immigration of illegal unskilled workers in a model of Cournot duopoly where firms are producing homogenous and non-traded goods, and hiring illegal immigrants. A two-stage simultaneous move game is set up: in Stage 1, given the opportunity of hiring illegal immigrants, an individual firm decides whether to adopt the new technology or not, where technology adoption is costly. In Stage 2, each firm will choose the Cournot output level. Solving this two-stage game, we conclude that (i) given the opportunity of hiring illegal immigrants, an individual firm may adopt the new technology and (ii) in the case of zero tolerance of illegal immigration, technology adoption may increase but such technology adoption is immiserizing as it reduces the total surplus.