The welfare economics of immigration control

Abstract.

This paper develops a Harris-Todaro (HT) type model of East-West migration in which labour market imperfections prevent market clearing in both blocs. The model encompasses two extremes of perfectly flexible wages with full employment on the one hand, and the HT scenario where the real wage in the host country is fixed, on the other. Welfare analysis compares the laissez-faire migration equilibrium based on explicit calculations of potential migrants without immigration controls in the West, with the socially optimal level of migration. The paper examines the issue of immigration control by developing a model of illegal immigration in which the incentives facing the potentially illegal immigrant are explicitly modelled.