Why are economists working on a framework of analysis for studying key decisions that potential migrants face when considering moving abroad? In other words, why this book?
The dramatic decline in the cost of communications and transportation over the last couple of decades facilitates international migration, making an attempt to migrate not only more accessible, but also much more rewarding for an increasingly larger number of potential migrants. With the resulting expansion in the flow of undocumented aliens and asylum seekers, migration has risen to the top of the political agenda in many of the advanced countries. And while immigration (documented as well as undocumented) generates significant benefits for consumers, owners of land and capital, as well as host-country workers whose skills are complementary to those of the immigrants, much of the voting population in the advanced countries sees immigration as a phenomenon that has a negative impact on their welfare. This puts a great deal of pressure on the authorities to reduce the inflow of immigrants and especially those who are undocumented. On the other hand, with an ageing population and low birth rates, there are economic reasons why advanced countries do need immigrants. To design policies that result in the desired, manageable inflows, it is essential to better understand how potential immigrants formulate their migration decisions. How do they react to a wide range of immigration policy measures? What is the role of labour-market conditions in the host and source countries? How do the skill level, wealth, age and other personal characteristics of potential migrants affect their decisions? These are key questions that need to be answered before one can begin to formulate appropriate immigration policies.
What research methodology do you use to answer these questions? And in which geographical areas do you work?
We use microeconomic analysis to examine individual behaviour. Potential migrants are assumed to be rational individuals who maximise their lifetime welfare by choosing optimal solutions to the problems that confront them in their quest to reach the destination country. To go beyond a theoretical analysis and obtain quantitative results, we simulate some of the models, using actual data to set values of the key parameters. Data concerning policy measures, undocumented migration flows, and personal characteristics of migrants in the studies collected in the book pertain to the USA, Japan, European Union, Thailand, Turkey, as well as other countries.
Based on your book, what is the most decisive factor for prospective migrants: the conditions of the host country’s migration policies or characteristics specific to the migrants themselves?
The two sets of factors interact with each other to generate outcomes. Consider, for example, the situation facing a documented guest worker whose authorisation to work in the host country is about to expire. Should he overstay and work for another employer as an undocumented alien or return to his source country in compliance with his contract? The answer depends on the policies of the host country as well as his personal characteristics and economic conditions both at home and abroad. If the maximum duration of the guest-worker permit is relatively short and the gap between wages at home and abroad relatively large, a guest worker has a strong incentive to remain in the host country illegally. This can be offset by strict internal enforcement measures as well as by a policy of recruiting guest workers from countries with a low cost of living and favourable conditions for starting a small business. Guest workers with larger asset holdings are also less likely to transit to undocumented status. Clearly, both factors you referred to play a critical role in influencing behaviour.
What are your conclusions regarding the effectiveness of immigration policies in controlling the influx and stock of undocumented migrants?
There is a wide range of measures employed by the host countries in their efforts to stem the inflow of undocumented immigrants. These include measures to control entry, such as restrictive policies regarding tourist and other types of visas, tight border controls that raise the cost of undocumented entry, internal enforcement measures aimed at lowering the demand for and wages received by undocumented labour, and deportation policies that reduce the expected benefit of an undocumented stay. We study, for example, the case of migrants from Thailand working in Japan. Without now going into details regarding the effectiveness of each individual policy measure, it is interesting to note that more favourable conditions offered to documented foreign workers can be more effective in influencing the choice between documented and undocumented entry than some of the internal enforcement measures specifically aimed at undocumented immigrants.
Your book also addresses the problem of human trafficking and debt-bonded migration. What factors contribute to the incidence of this form of international migration?
Liquidity constraints prevent most potential migrants from realising their aspirations to work abroad. We examine the economic environment in which migration is an attractive option for liquidity-constrained individuals and under what conditions they choose debt bondage as the optimal financing mode. Other modes of finance include saving out of income to cover the cost of migration or borrowing from relatives to cover a part of the cost. What makes debt bondage appealing to potential migrants, in spite of the high interest charges and the prospect of being underpaid by the traffickers while working abroad, is that it brings them sooner to the foreign high-wage economy. Getting abroad sooner is of greater significance the larger the wage differential between the host and source countries. High interest charges on the debt are a disadvantage, the weight of which is greater, the higher the cost of migration. We thus find that debt bondage is the preferred financing option when the international wage differential is large relative to migration costs.
You say that international cooperation between host and transit countries is important. Can you expand on this point?
A significant majority of undocumented migrants arriving in advanced countries are transiting through a neighbouring country. Thus, the ability of the EU, for example, to stem the flow of undocumented immigrants is affected by the measures of its North African neighbours aimed at preventing undocumented, third-country nationals from transiting their territory on the way to the EU. I find that with respect to immigration control, the effectiveness of both internal and border control measures is greater at the transit-country level than it is at the level of the final-destination country. At the same time the cost is relatively lower. This suggests that there exist large potential gains from cooperation (supported by possible transfers of aid) between the final-destination and transit countries in their efforts to control undocumented migration.
Finally, in the light of your book, how do you see the shift in American migration policy imposed by Trump in 2025?
The Trump campaign capitalised on the discontent of the working-class population that experienced decades-long stagnation in real wages. It then blamed immigration policies of the Democrats for many of the ills facing American voters. And while there is some truth in that, the drastic measures implemented by the current administration are highly disruptive and are likely to do more harm than good to the US economy. The types of jobs that undocumented migrants have access to are at the bottom of the occupational ladder. These are dirty, dangerous, physically demanding and underpaid types of work. Some are entry-level jobs for US citizens who find them unattractive because of the competition they face from undocumented immigrants. But that competition in fact encourages young Americans to seek more education and to develop skills that enable them to become more productive and to move up occupationally. In a society where young people underestimate the private and social benefits of education, I don’t see this competition for jobs with undocumented aliens as having a negative impact on US citizens. There is a whole list of benefits that the US economy enjoys as a result of undocumented migration, but it is too long to discuss here. On the other hand, it is clearly against the law for migrants to enter and work in the country without documentation. It looks as if the Trump administration is focused on this latter issue while ignoring many of the positive economic effects of undocumented migration.
Djajic, Slobodan, and Alexandra Brausmann.