Immigration control and the welfare state

We examine a model of a rich country with a redistributive public sector and facing costly immigration control. When illegal immigrants have access to the public sector we show that, as border control becomes more expensive, inequality in the rich country increases, redistributive transfers decrease and then may increase, some immigration is permitted and foreign aid may be used to reduce the migration pressure. Because of nonconvexities, we also show that a small increase in the poor country’s population can lead to the collapse of the redistributive public sector. We then consider excluding illegal immigrants from the public sector (e.g. California Proposition 187). We find that collapse is no longer possible and that the rich country takes the toughest official stance on immigration but does not enforce it with border controls.