February 2013

IZA DP No. 7220: Minimum Wages and the Creation of Illegal Migration

published in: Economics Bulletin, 2013, 33 (1), 434-441

In this paper, we explore employers' decisions regarding the employment of legal and illegal immigrants in the presence of endogenous adjustment cost, minimum wages and an enforcement budget. We show that increasing the employment of legal foreign workers will increase the number of illegal immigrants which will replace the employment of the local population and thus creating illegal migration.