Wednesday, April 05, 2006

On the Border with Economic Incentives

Via Roland Patrick, I am led to Professor James D. Miller's application of economic incentives to the immigration and border issue, and as I am an economist, I like what I read. And I wonder if it will work. From the column at TCS Daily:

Ideally, Mexico would help us police our shared border. But Mexico receives huge remittances from its citizens unlawfully working in the U.S., so it's currently in Mexico's interest to promote illegal immigration. A well-designed guest worker program, however, could change this and turn Mexico into a U.S. immigration ally.

President Bush has proposed creating a guest worker program in which many Mexicans would have the legal right to work temporarily in the U.S. Unfortunately, even with Bush's program in place Mexico would still encourage its people to work illegally in the U.S. and send home some of their pay.

So instead we should create a guest worker program under which the number of legal Mexican guest workers is based on the number of illegal Mexican immigrants in the U.S. For example, for every additional illegal Mexican immigrant who enters the U.S., the number of Mexican guest worker slots could be reduced by two. Under this plan, Mexico has an incentive to reduce illegal immigration into our country.

If you want Mexico's help on the border, find a way to tax Mexico for violations of the border. Miller acknowledges the challenges to implementation. It necessarily includes legitimizing what is now done illegally, and yet it may also involve penalties that are stiffer than what the pro-illegal-immigration crowd would be willing to accept. But it's an interesting idea to consider.

4 comments:

Arun Khanna said...

Re: So instead we should create a guest worker program under which the number of legal Mexican guest workers is based on the number of illegal Mexican immigrants in the U.S. For example, for every additional illegal Mexican immigrant who enters the U.S., the number of Mexican guest worker slots could be reduced by two. Under this plan, Mexico has an incentive to reduce illegal immigration into our country.

First, if we could identify illegal immigrants and count them, we would not have a big problem. Second, it is unlikely that U.S. is willing to offer twenty four million guest worker slots to Mexico which would correspond to two-for-one scheme regarding 12 million illegal immigrants already in the U.S. (since U.S. cannot reliably figure out which are 'new' versus old illegal immigrants). Therefore, the plan actually implies that U.S. is willing to offer more than twenty four million guest worker permits. This is simply at variance with reality.

Here is an alternative solution.

One, charge Mexican government for expenses involved in search and deportation, border security and other expense directly tied to Mexican illegal immigrants.
Second, provide tax incentives to individuals or firms helping identify illegal immigrants.
Three, deport any illegal immigrant caught within 24 hours by Amtrak (this will help revive Amtrak's flagging fortunes too).
Four, make English mandatory in educational institutions that receive any government funding or financial aid.

Darren said...

Two points:

1. I second Arun Khanna point regarding the difficulty in counting illegal immigrants in the U.S. It's very difficult, and the best we can do is come up with noisy estimates. As a result, it's likely that adjustments to the number of guest worker slots would end up reflecting political winds more than real changes in the number of illegals coming over.

2. The Mexican government doesn't have much more control over illegal migration than we do (maybe they aren't trying as hard as we are to 'secure the border' but if they did try as hard, I'm quite sure they wouldn't be any more successful than we currently are). Mexicans want to work in the U.S. So barriers of one form just lead migrants to come over a different way.

I agree with Miller's point that the U.S. and Mexico mostly have common interests regarding migration, and we design a policy that utilizes the strengths of each government. This seems to be a missing element in the debate so far.

Anonymous said...

Mexico has a lot of opportunities for quick and long-term improvements within Mexico and the economy in Mexico. The Financial Times had an entire section on Mexico during the previous year. This pretty much spelled-out many of the things that do not work quite-right in the economy in Mexico.

To the extent Mexico fixes things in Mexico, it would help immigration in the U.S.

Per my fuzzy recollection from reading the FT, I was surprised to learn that there may be more monopolies and anti-competitive behavior in Mexico than in the U.S. There is not the same history of govt. action to curb monopolies in Mexico.

PGL said...

Ed Tower of Duke had a similar idea but went one step further. He would get rid of all the restrictions but put a shadow price on people migrating. Some folks would have a negative shadow price, which is akin to your tax. Of course, other folks (e.g., great athlete or musician wishing to flee despotism) would have a positive shadow price. Translation - the US would have to pay Cuba for their star baseball players.