Discussion Paper No.1601

Abstract :
Employing the basic model of illegal migration by Bond and Chen (1987) and Yoshida (1993), we studied the recent trends of illegal migrants in Europe.Initially, they cross the border of marginal countries (e.g., Greece or Italy), which are part of a large economic bloc (i.e., the European Union), with the intention of moving within the bloc to find good job opportunities in more developed countries (e.g., Germany); this is facilitated by a lack of passport controls among member countries. Particularly, we focus on the optimal policies of Germany, a highly developed country, as the final destination of immigrants from two different routes (i.e., via Italy with border control, or via Greece without any restriction). We found that under certain conditions, to enhance the domestic wage rate or economic welfare Germany should introduce border controls between Greece and instead, maintaining revenue neutrality, reduce internal enforcement targeted at employed illegal immigrants from not only Greece but also Italy.