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The Role of Risk Preference in Immigration and Minimum Wage Policies

  • Yulian Wang und Hongfei Zhu EMAIL logo
Veröffentlicht/Copyright: 12. Juli 2014
The B.E. Journal of Economic Analysis & Policy
Aus der Zeitschrift The B.E. Journal of Economic Analysis & Policy Band 14 Heft 4

Abstract

This paper examines the effects of two enforcement policies and a minimum wage policy in controlling illegal immigration and improving welfare when capital is immobile. The model highlights the importance of the role of risk preference by considering various attitudes to risk held by illegal immigrants and host firms. It is shown that the effect of internal enforcement on the wage rate in host firms depends on the attitude to risk of illegal immigrants and host firms. It is also shown that the impacts of the minimum wage legislation differ according to risk preference and the degree of labor employment elasticity to the source wage. Moreover, attitude to risk is shown to be important in determining the effectiveness of policies on welfare.

Keywords: illegal migration; immigration policy; risk preference

Acknowledgments

We are indebted to Makoto Tawada (Nagoya University), Jinfeng Ge, and Dihai Wang (Fudan University) for comments. We gratefully acknowledge the financial supports by Social Science Foundation of China (No. 11CJL024, 11&ZD006, and 12&ZD074), National Nature Science Foundation of China (No. 71373047), and The Ministry of Education of Humanities and Social Science Project (No. 13YJA790110).

References

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  1. 1

    Some developed countries have also introduced minimum wage legislation. However, in this analysis, we assume that the host country is labor scarce and that the minimum wage legislation affects many more workers in the source country.

  2. 2

    If a full dynamic continuous adjustment specification is assumed, the stability condition with sluggish adjustment of all variables (w, I, and N) includes the requirements of conditions [9a] and [9b] (details available upon request from the authors).

  3. 3

    Following Woodland and Yoshida (1996), the penalty, g1−gIc, is considered to be the opportunity cost of being arrested, given that unsuccessful illegal immigrants may not have worked and therefore may be unable to pay the fine.

Published Online: 2014-7-12
Published in Print: 2014-10-1

©2014 by De Gruyter

Artikel in diesem Heft

  1. Frontmatter
  2. Advances
  3. Financial Reforms and International Trade
  4. Re-thinking the Concept of Surplus: Embracing Co-creation Experiences in Economics
  5. Contributions
  6. After-School Center-Based Care and Children’s Development
  7. The Effect of Family Background on Student Effort
  8. Policy Uncertainty and Technology Adoption
  9. Competing Activities in Social Networks
  10. The Value of Postponing Pregnancy: California’s Paid Family Leave and the Timing of Pregnancies
  11. Technological Progress and the Environmental Kuznets Curve in the Twenty Regions of Italy
  12. Designated Driver Service Availability and Its Effects on Drunk Driving Behaviors
  13. Topics
  14. Environmental Taxes in Duopoly with Soft Capacity Constraints
  15. The Impact of Korea’s Green Growth Policies on the National Economy and Environment
  16. Microfinance Regulation and Market Development in Latin America
  17. Producer Liability and Competition Policy When Firms Are Bound by a Common Industry Reputation
  18. Effect of Work–Life Balance Practices on Firm Productivity: Evidence from Japanese Firm-Level Panel Data
  19. The Role of Risk Preference in Immigration and Minimum Wage Policies
https://doi.org/10.1515/bejeap-2013-0039
Schlagwörter für diesen Artikel
illegal migration; immigration policy; risk preference

Artikel in diesem Heft

  1. Frontmatter
  2. Advances
  3. Financial Reforms and International Trade
  4. Re-thinking the Concept of Surplus: Embracing Co-creation Experiences in Economics
  5. Contributions
  6. After-School Center-Based Care and Children’s Development
  7. The Effect of Family Background on Student Effort
  8. Policy Uncertainty and Technology Adoption
  9. Competing Activities in Social Networks
  10. The Value of Postponing Pregnancy: California’s Paid Family Leave and the Timing of Pregnancies
  11. Technological Progress and the Environmental Kuznets Curve in the Twenty Regions of Italy
  12. Designated Driver Service Availability and Its Effects on Drunk Driving Behaviors
  13. Topics
  14. Environmental Taxes in Duopoly with Soft Capacity Constraints
  15. The Impact of Korea’s Green Growth Policies on the National Economy and Environment
  16. Microfinance Regulation and Market Development in Latin America
  17. Producer Liability and Competition Policy When Firms Are Bound by a Common Industry Reputation
  18. Effect of Work–Life Balance Practices on Firm Productivity: Evidence from Japanese Firm-Level Panel Data
  19. The Role of Risk Preference in Immigration and Minimum Wage Policies
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