Article
Illegal Immigration and the Shadow Economy
International Tax and Public Finance
(2017)
Abstract
We build a model in which both illegal immigration and the size of the informal sector are endogenously determined. In this framework, we show that indirect policy measures such as tax reduction and detection of informal activities can be used as substitutes for border enforcement, in order to counteract illegal immigration. We also find that a welfare-maximizing government will set the tax rate to a lower value, if it includes illegal immigration in its objective function, instead of focusing on the well-being of native workers only.
Keywords
- Illegal Immigration,
- Informal sector,
- Shadow economy,
- Taxation,
- Immigration policy,
- Migration
Disciplines
Publication Date
Spring April 3, 2017
Citation Information
Carmen Camacho, Fabio Mariani and Luca Pensieroso. "Illegal Immigration and the Shadow Economy" International Tax and Public Finance Vol. 24 Iss. 6 (2017) p. 1050 - 1080 Available at: http://works.bepress.com/luca_pensieroso/15/