In most developed economies, there is a strong popular demand for immigration control. This is probably the main lesson of the UK referendum on Brexit, and it is true elsewhere, as shown by the growing popularity of right-wing parties in the polls and across Europe.1 In response to these concerns, governments have tightened border controls over the past few decades and imposed visa quotas. However, these policies do not effectively prevent undocumented immigration but rather fuel the market for smugglers.
Strict restrictions on the mobility of labor are intended to force many to migrate with the help of intermediaries to arrange their migration. Intermediaries arrange for air, sea or land transportation and provide candidates with forged documents, clothing, food and accommodation during travel and often offer bonded jobs in destination countries to refund fees (Friebel and Guriev 2006).
Although the smuggling market seems to be in the hands of many smaller suppliers, the smuggling market for long-distance migration is more concentrated. It involves sophisticated operations and requires a large and extensive network to transport people illegally over long distances. Prices are also higher for long-distance migration. This makes human trafficking a lucrative business, bringing in billions upon billions of dollars each year on powerful networks.2
Over the years, human trafficking has merged with other forms of illicit inland activity, such as drug trafficking and prostitution. These activities weaken legal entities everywhere – whether in the country of origin, transit or destination. In some countries, such as Mexico, they have become a real threat to the rule of law. They are also used as weapons against our democracy and the EU, as has recently been demonstrated in Belarus.
The huge disparity in economic potential between low- and high-income countries provides huge incentives to migrate irregularly (Clemens et al. 2019). Many irregular migrants work in the undocumented labor market, a common feature of most OECD countries, although there are variations in size. These workers have either crossed the border irregularly or passed their temporary visas to stay in a high-paying economy. And there is a strong demand for them in some sectors of the economy, where they can supplement the labor of local workers or meet the demand of the labor market (Peri et al. 2013, Butcher et al. 2022). These sectors – such as agriculture, restaurants, housing, care and construction – are characterized by hard working conditions and low wages.
From an economic point of view, current restricted immigration policies are not effective. They ignore the labor market demand for low-skilled foreign workers, create a missing market for work permits (Lokhsin and Ravalllion 2019), and favor criminal activity. The heavy social costs they incur (loss of human life, loss of financial revenue, corruption, money laundering, violence, terrorism, slavery) are never internal. Instead, policymakers assume that such policies will work, leaving the police to deal with the crime separately. Nevertheless, internalizing these costs could weaken the human trafficking market.
Is there a better way to meet the demands of the labor market in a high paying economy than to use the services of smugglers?
In a new study (Auriol et al. 2021), we discussed how the market implementation of temporary foreign work permits could help reduce human trafficking and control economic migration.
Extending the work of Auriol and Mesnard (2012, 2016), we model the decisions of potential immigrants – either crossing the border illegally or migrating through a temporary visa scheme – accounting for the response of smugglers, who respond to immigration policy by adjusting their fees. To maximize profits. Candidates are workers of different skill levels who are willing to relocate from low wage to high wage country. Under the status quo, there is no legal way to migrate for low-skilled workers who therefore go to the service of smugglers. This leads to a balance where smugglers share the profits of the illicit market. The introduction of temporary foreign work permits provides legal channels to migrate candidates, where smugglers respond strategically by lowering their fees.
Could such a policy drive smugglers out of business? If the visa price is low enough, a Eviction levelSmugglers can no longer make a profit when they compete with low-cost services.
We see that the combination of a combination of internal and external controls with the economic visa market allows this eviction value to reach a pre-determined immigration goal. By modeling how smugglers approach candidates for economic immigration and respond to policies, we show that transactions between reducing human trafficking and controlling immigration flows can be stopped through carefully designed temporary visa schemes.
Such schemes are consistent with the current legal framework inherent in temporary Overseas Work Permits in many OECD countries. We show that they are more likely to occur if the wage difference between the source and destination countries is not too large. Otherwise, fixing the value of temporary foreign work permits and ensuring timely return of temporary workers is subtle.
Large wage differences involve high bets for potentially irregular overstayers. Their decisions are therefore more sensitive to the risk of failing irregular border crossings, which vary with time and route and are difficult to predict accurately. This further refers to volatile eviction costs and makes it difficult to determine the value of temporary foreign work permits at eviction costs, as illustrated by our calibration on the route from Senegal to Europe. If, as is the case in most European countries, the risk of deportation is low3 And the wage gap with the main countries is huge, temporary foreign workers are discouraged to return to their country. Even free visas do not guarantee a reduction in the smuggling market: workers may sometimes have to pay higher subsidies to return to their home country.
Therefore, in order to ensure effective temporary foreign work permits, some governments must strictly enforce their immigration policies, for example through strict deportation measures and sanctions against irregular immigrants.4 Such practices are common among authoritarian states, including Southeast Asia and the Gulf states, with large systems of temporary foreign work permits. These will be unsuitable and very expensive in most EU countries.5
How to promote and implement legal temporary migration channels for low-skilled workers
We show, however, that application Prohibition against illegal recruitment It may provide more promising tools for combating undocumented workers in destination countries. By reducing wages in the irregular labor market, it will increase the attractiveness of legal immigration channels, as well as discourage foreign workers from staying overtime to work illegally. Such policy tools should be carefully integrated with a legal market to allow temporary foreign work to be effective against human trafficking.
In reality, governments in developed economies may take various measures in the form of ‘sticks’ and ‘carrots’ against the employers of undocumented workers, such as giving workers timely points towards a more stable situation in the future. Returning or retaining future eligibility for a visa, as has been done in Canada.
Although our proposed schemes may face resistance for obvious political-economic reasons, they will support the employment of low-skilled workers in short supply in certain sectors of the developed economy, as highlighted in France, Italy and the Cowid-19 crisis. UK (Klein-Rushkamp and Ozguzel 2020). This demand for low-skilled workers is difficult to meet with current policies, which tend to recruit high-skilled economic migrants (Fasani and Mazza 2020).
Auriol, E, and A Mesnard (2012), “Visa Sale: The Final Song of a Smuggler?” VoxEU.org, June 4.
Auriol, E, and A Mesnard (2016), “Visa Sale: The Final Song of a Smuggler?” Economic 83 (332): 646–78.
Auriol, E, A Mesnard and T Perrault (2021), “Controlling Irregular Immigration: Can a Market Help for Temporary Foreign Work Permits?” CEPR Discussion Paper 16777.
Butcher K, K. Moran and T. Watson (2022), “Immigration and the Care of America’s Older People”, VoxEU.org, 22 February.
Clemens, MA, CE Montenegro and El Prichet (2019), “Space Premium: Migration Barrier Equivalent Price Limitation”, Economics and Statistics Review 101 (2): 201-13.
Djajić, S, and A Vinogradova (2015), “Additional guest staff and incentives to return”, CESifo Economic Studies 61 (3-4): 764-96.
Dooley, B., and H. Weno (2021), “Japan trembles after a prisoner, perishes, dies alone in his cell”, New York Times, August 10.
Fasani, F., & J. Maza (2020), “Migrant Key Workers: Their Contribution to Europe’s COVID-19 Response”, IZA Discussion Paper.
Freibel, G., and S. Guriev (2006), “Human Trafficking: A Theory of Debt-Financed Migration”, Journal of the European Economic Association 4 (6): 1085-111.
Kleine-Rueschkamp, L, and C Ozguzel (2020), “COVID-19 and key staff: the role of migrants across regions and cities”, VoxEU.org, 9 December.
Peri G, A, Romiti and M Ross (2013), “Migration, Caring for the Elderly and Labor Participation: Can Migration Help Women Retire Later?”, VoxEU.org, 8 September.
UNDOC – United Nations Office on Drugs and Crime (2018), Global Study on Immigrant Smuggling.
1 In France, for example, the far-right party achieved an unprecedented score in the last presidential election in April 2022, with 23% of the votes cast in the first round and 41% in the second round.
2 Economic income is estimated to be above 5. 5.5-7 billion in 2016, with more than 2.5 million people trafficked worldwide (UNODC 2018).
3 These risks are difficult to estimate and vary widely across countries (see Eurostat statistics here).
Irregular foreign workers in Japan have been sentenced to 4 years in prison, for example (Dooley and Ueno 2021).
5 Estimated total cost of deportation per person was $ 12,500 per person in the United States in 2011, $ 11,000 in the United Kingdom and 50,000 Norwegian kroner ($ 9,000) in Norway in 2013 (Djajić and Vinogradova 2015).
6 The Iverify System, a federal database in the United States that allows employers to examine employees’ job eligibility documents, is not yet mandatory in most U.S. states. When this happens, the requirements often only apply to government agencies or contractors.