Creating Illegal Immigrants

Abstract

This paper considers the prospects for successful implementation by governments of guest-worker programs that are based on an intended temporary presence of foreign workers. A means of enforcement of temporary presence is a penalty imposed for overstaying the permissible time period. Employers who are obliged to post bonds for their foreign workers are provided with an incentive to ensure that their workers leave at the end of their contractually specified stay. We consider the consequences of such a bond when foreign workers can leave legal employers for illegal employment. We also investigate the effectiveness of deferred payments to foreign workers as a means of discouraging transition from legal employment to illegal presence. In the final analysis, although the policy intention is a temporary stay, we conclude that if foreign workers do not wish to return home, there is an almost inevitability to the creation of a population of illegal immigrants (whose presence may be subsequently legalized).

JEL Classification: F22, K42, P16