Smuggling Humans : A Theory of Debt-Financed Migration

@inproceedings{Friebel2002SmugglingH,
  title={Smuggling Humans : A Theory of Debt-Financed Migration},
  author={Guido Friebel and Sergei Guriev},
  year={2002}
}
We introduce financial constraints in a theoretical analysis of illegal immigration. Intermediaries finance the migration costs of wealth-constrained migrants, who enter temporary servitude contracts to repay the debt. These debt/labor contracts are easier to enforce in the illegal than in the legal sector of the host country. Hence, when moving from the illegal to the legal sector becomes more costly—for instance, because of stricter deportation policies—fewer immigrants default on debt. This… CONTINUE READING
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