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DOI: 10.1007/s10101-004-0073-y
Econ. Gov. (2005) 6: 3339Nava Kahana, Tikva LeckerDepartment of Economics, Bar-Ilan University, 52900 Ramat-Gan, Israel
(e-mail: {kahanan;leckert}@mail.biu.ac.il)Received: August 15, 2002 / Accepted: January 21, 2004Abstract. Rich countries often face sizeable illegal migration. This paper suggests
that these countries would use the nancial aid which they give to the source
countries as an instrument to prevent illegal immigration. The core of this policy is
to allow the source countries to compete for the pre-determined aid, which would
be distributed according to the cross-proportion of the apprehended illegal aliens.
Moreover, we show that it may be benecial for the rich country to split the source
countries into competing pairs rather than allowing all of them to compete jointly.
The rich country has basically two policy means: funds allocated to strengthening its
border control; and the foreign aid given to the source countries. The multi-country
general equilibrium model presented shows how the rich country, by choosing an
appropriate mix of these two policy means, can minimize the number of illegal
immigrants subject to its budget constrain.Key words: Illegal immigration, foreign aidJEL Classication Numbers: F221. IntroductionIllegal migration is a worldwide economic issue and not merely a neighboringcountries phenomenon. Bratsberg (1995), for example, reports on seventy source
countries of illegal immigrants to the United States. According to an estimate of the
Immigration and Naturalization Service (INS), 400,000 new illegal aliens settle in
the United States, annually Camarota (1998). The authors are grateful to two anonymous referees for their valuable comments.c
Springer-Verlag 2005Competition as a track
for preventing illegal immigration34 N. Kahana, T. LeckerIllegal immigration is a troublesome phenomenon for the rich countries. Djajic (1997), among others, analyzes the negative effects of illegal immigration and
the associated expansion of the underground economy on resource allocation, commodity prices and wages. The negative impact of illegal immigration on the resident
populations well - being motivates rich countries to take measures against it. Diverse policy strategies have been directed towards reducing illegal immigration.
While Ethier (1986) and Chiswick (1988) among others, suggested border and domestic enforcement, Edgardo et al. (1995) proposed helping source countries to
maintain their political stability thereby moderating the illegal labor ow. These
signicantly different instruments for immigration control are all costly. For example, the INS the parent agency...