Coyote
Crossings: The Role of Smugglers in Illegal Immigration and Border Enforcement
By Joseph H. Haslag, Mark G. Guzman, and Pia M. Orrenius
July 2002
RWP 02-04
Research Division
Federal Reserve Bank of Kansas City
Abstract
Illegal immigration and border enforcement in the United States have increased concomitantly for over thirty years. One interpretation is that U.S. border policies have been ineffective. We offer an alternative view, extending the current immigration-enforcement literature by incorporating both the practice of people smuggling and a role for non-wage income into a two-country, dynamic general equilibrium model. We state conditions under which two steady state equilibria exist: one with a low level of capital and high amount of illegal immigration and the other with a high level of capital, but relatively little migration. We then analyze two shocks: a positive technology shock to smuggling services and an increase in border enforcement. In the low-capital steady state, the capital-labor ratio declines with technological progress in smuggling, while illegal immigration increases. In the high-capital steady state, a technology shock causes the capital-labor ratio to rise while the effect on migration is indeterminate. We show that an increase in border enforcement is qualitatively equivalent to a negative technology shock to smuggling. Finally we show that a developed country would never choose small levels of border enforcement over an open border. Moreover, a high level of border enforcement is optimal only if it significantly decreases capital accumulation. In addition, we provide conditions under which an increase in smuggler technology will lead to a decline in the optimal level of enforcement.
Keywords: Smuggling, Illegal Immigration, Border Enforcement, Economic Growth
JEL Codes: E61, F22, J61, O15
Joseph H. Haslag is an associate professor of economics at the University of Missouri. Mark G. Guzman is an economist at the Federal Reserve Bank of Dallas. Pia M. Orrenius is a senior economist at the Federal Reserve Bank of Dallas. The authors would like to thank Jim Dolmas, Greg Huffman and Van Pham, as well as seminar participants at the Dallas Fed for their helpful discussions. They would also like to thank Olga Zograf for her research assistance. The views expressed are those of the authors and do not represent those of the Federal Reserve Bank of Kansas City, the Federal Reserve Bank of Dallas or the Federal Reserve System.
Haslag e-mail: haslagj@missouri.edu