Gabriella Bucci                                                         Rafael Tenorio
                   Department of Economics                                         Department of Economics
                   DePaul University                                                     DePaul University
                   1 E. Jackson Blvd.                                                     1 E. Jackson Blvd.
                   Chicago, IL 60604                                                     Chicago, IL 60604
 
 

We introduce a government budget constraint into an illegal immigration model, and show that the effect of increasing internal enforcement of immigration laws on the host country's disposable national income depends on the mix of employer fines and income taxation used to finance the added enforcement. These issues are addressed under alternative assumptions about (a) the ability of host country employers to discern between legal and illegal workers, and (b) host country labor market conditions. Empirical evidence for the U.S. indicates that the employer sanctions program may have had a negative impact on disposable national income.
 
 

JEL Classification: F22, K42
 
 

Key words: illegal immigration, enforcement of laws, government budget