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Guest Workers in the Underground Economy

Author

Listed:
  • Slobodan Djajic

    (The Graduate Institute)

  • Alice Mesnard

    (City University)

Abstract

Guest-worker programs have been providing rapidly growing economies with millions of temporary foreign workers over the last couple of decades. With the duration of stay strictly limited by program rules in most of the host countries and wages paid to guest workers often set at sub-market levels, many of the migrants choose to overstay and seek employment in the underground economy. This paper develops a general-equilibrium model that relates the flow of guest workers transiting to the underground economy to the rules of the program, enforcement measures of the host country and market conditions facing migrants at home and abroad.

Suggested Citation

  • Slobodan Djajic & Alice Mesnard, 2013. "Guest Workers in the Underground Economy," RF Berlin - CReAM Discussion Paper Series 1324, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    • Handle: RePEc:crm:wpaper:1324
    as

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    File URL: https://www.cream-migration.org/publ_uploads/CDP_24_13.pdf
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    References listed on IDEAS

    as
    1. Guido Friebel & Sergei Guriev, 2006. "Smuggling Humans: A Theory of Debt-financed Migration," Journal of the European Economic Association, MIT Press, vol. 4(6), pages 1085-1111, December.
    2. Frank Bean & B. Lowell & Lowell Taylor, 1988. "Undocumented Mexican immigrants and the earnings of other workers in the United States," Demography, Springer;Population Association of America (PAA), vol. 25(1), pages 35-52, February.
    3. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, vol. 84(1), pages 1-14, May.
    4. Woodland, Alan D. & Yoshida, Chisato, 2006. "Risk preference, immigration policy and illegal immigration," Journal of Development Economics, Elsevier, vol. 81(2), pages 500-513, December.
    5. Sherrie A. Kossoudji & Deborah A. Cobb-Clark, 2002. "Coming out of the Shadows: Learning about Legal Status and Wages from the Legalized Population," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 598-628, July.
    6. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
    7. Slobodan Djajić, 2013. "Some Essentials Of A Workable Guest‐Worker Program," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 739-766, May.
    8. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(1), pages 91-116.
    9. Ethier, Wilfred J, 1986. "Illegal Immigration," American Economic Review, American Economic Association, vol. 76(2), pages 258-262, May.
    10. Djajić, Slobodan & Vinogradova, Alexandra, 2013. "Undocumented migrants in debt," Labour Economics, Elsevier, vol. 21(C), pages 15-24.
    11. Slobodan Djajić & Michael S. Michael, 2013. "Guest worker programs: A theoretical analysis of welfare of the host and source countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(3), pages 454-475, April.
    12. repec:hal:spmain:info:hdl:2441/ir3267m2793mq59aqoimcu636 is not listed on IDEAS
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    Cited by:

    1. Slobodan Djajic, 2014. "Guest-Worker Programs," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 16-19, 07.
    2. repec:ces:ifodic:v:12:y:2014:i:2:p:19116207 is not listed on IDEAS
    3. Slobodan Djajic, 2014. "Guest-Worker Programs," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 16-19, July.

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    More about this item

    Keywords

    Temporary migration; undocumented workers; underground economy;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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