October 04, 2013
News /
Posted by NCID

Governments dislike large stocks of immigrants and spend significant resources in limiting the number of entries into their countries. However, once a mass of illegal immigrants has accumulated, a powerful incentive emerges to retrieve some fiscal base by granting immigration amnesties. By regularizing the illegal workers governments can increase fiscal revenue through the much larger tax base. “Apart from not contributing to taxes, illegal workers, free ride and are more involved in illegal activities” said Francesco.

“My main question is, ‘over the past 30 years, why have governments rejected over 30% of all immigrant applications?’”, he asked the audience. In the model, Francesco showed that governments are incentivized to tax only the richest applicants and expel the poorest ones. Immigrants therefore face a dilemma, because the amnesty can be used to apprehend and deport them. If they know beforehand that their application for residence will be rejected, then they would rather not apply since this would be self-incriminating. “The Berlusconi government announced an amnesty to immigrants that would raise estimated fiscal revenues of 1.2-1.6 billion Euros corresponding to 750,000 regularizations” said Francesco. Only 295,126 people applied because many people did not trust the government to commit to its decision.

“People are willing to trust the government until that point where it deviates even just once… what happens ex ante is not what happens ex post!” said Francesco. His conclusion was that Immigration amnesties are intrinsically sub-optimal and only the richest immigrants apply.