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Illegal Immigration and the Shadow Economy

Author

Listed:
  • Carmen Camacho

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Fabio Mariani

    (UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain, IZA - Institute for the Study of Labor - Institute for the Study of Labor (IZA) Bonn)

  • Luca Pensieroso

    (UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain)

Abstract
We build a general equilibrium model in which both illegal immigration and the size of the informal sector are endogenously determined and interact in a non-trivial way. We show that policy measures such as tax reduction and detection of informal activities can be used as substitutes for border enforcement, in order to contrast illegal immigration. In our framework, a welfare-maximising Government will never choose to drive illegal immigration to zero, but will set the tax rate to a lower value if it includes illegal immigration in its objective function.

Suggested Citation

  • Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2015. "Illegal Immigration and the Shadow Economy," Post-Print halshs-01178945, HAL.
    • Handle: RePEc:hal:journl:halshs-01178945
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01178945
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mariani, Fabio & Mercier, Marion, 2021. "Immigration and crime: The role of self-selection and institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 538-564.
    2. Friedrich Schneider & Mangirdas Morkunas & Erika Quendler, 2021. "Measuring the Immeasurable: The Evolution of the Size of Informal Economy in the Agricultural Sector in the EU-15 up to 2019," CESifo Working Paper Series 8937, CESifo.
    3. Carmen Camacho & Fabio Mariani & Luca Pensieroso, 2018. "Dealing with Illegal Immigration: the Role of Informality, Taxation and Trade," LIDAM Discussion Papers IRES 2018007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Sefa Karagoz, 2020. "The Importance of the Informal Economy for Social Policy," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 70(2), pages 479-505, December.
    5. Barbara Annicchiarico & Claudio Cesaroni, 2018. "Tax reforms and the underground economy: a simulation-based analysis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(2), pages 458-518, April.
    6. Emanuele Bracco & Luisanna Onnis, 2022. "Immigration, amnesties, and the shadow economy," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1135-1162, October.
    7. Mangirdas Morkunas, 2022. "Measuring the Level of the Youth Informal Economy in Lithuania in 2004–2020," Economies, MDPI, vol. 10(11), pages 1-13, November.
    8. Vicente Ríos & Antonio Gómez & Pedro Pascual, 2021. "Raising the Accuracy of Shadow Economy Measurements," Hacienda Pública Española / Review of Public Economics, IEF, vol. 239(4), pages 71-125, November.
    9. Friedrich Schneider & Mangirdas Morkunas & Erika Quendler, 2023. "An estimation of the informal economy in the agricultural sector in the EU‐15 from 1996 to 2019," Agribusiness, John Wiley & Sons, Ltd., vol. 39(2), pages 406-447, March.
    10. Pia M. Orrenius & Madeline Zavodny, 2016. "Irregular immigration in the European Union," Working Papers 1603, Federal Reserve Bank of Dallas.
    11. Giulia Bettin, 2019. "Il valore economico dell?immigrazione," PRISMA Economia - Societ? - Lavoro, FrancoAngeli Editore, vol. 2019(2), pages 12-30.

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    More about this item

    Keywords

    Illegal immigration; Clandestine workers; Informal sector; Shadow economy; Black market; Taxation; Immigration policy;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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