IZA DP No. 1401: When Migrants Overstay Their Legal Welcome: A Proposed Solution to the Guest-Worker Program
A number of developed countries have implemented guest-worker programs in recent decades. Its basic feature is the temporary presence of the foreign guest-workers. The problem with such programs is that there is little to prevent these guest-workers from entering the illegal job market and overstay their legal welcome, which is the reason why these programs became unpopular over time. This paper argues that a well-designed guest-worker program could be acceptable to host countries and could be beneficial for all parties concerned. It presents a host country immigration policy that tries to achieve these objectives by raising the likelihood that guest-workers return to their home country when the permissible time period elapses, and that reduces the number of immigrants entering the country illegally. The policy has three components and is based on legal responsibility by the guest-workers, new insurance markets, and cooperation with the sending country or countries.