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Guest Workers in the Underground Economy

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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 Djajić & Alice Mesnard, 2013. "Guest Workers in the Underground Economy," IHEID Working Papers 15-2013, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp15-2013
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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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