Sale of visas: A smuggler’s final song?

Published on VOXeu.org, by Emmanuelle Auriol and Alice Mesnard, 4 June 2012.

Is there a way of eliminating human smuggling? This column argues it can be done that by legalising migration through the sale of visas at a price that pushes smugglers out of business. The resulting trade-off between eliminating human smuggling and controlling migration flows can be dealt with the right policy mix of traditional repressive instruments and innovative pricing tools.  

Each year, an estimated 2,000 people drowned on their migrant’s journey from Africa to Europe (The Economist 2005) and many more on other routes.  Not only is crossing borders illegally a dangerous operation but it also entails very high financial costs. For border crossings such as from Mexico to the US, human smugglers can charge up to $4,000, while trans-pacific crossings of Chinese immigrants to the US cost above $35,000 in the mid-90s and have since increased sharply.

With estimated revenues of around $5 billion a year in the US and €4 billion in the EU (Padgett 2003), people smuggling is a lucrative business. Over the years, it has integrated with other types of illegal activities such as drug shipping and prostitution. Led by international criminal organisations they pose a threat to the rule of law in countries of origin, transit, and destination.
Although it is important for policymakers to understand why these illegal activities and their associated criminalities are so prevalent, there are surprisingly few studies on the supply side of illegal migration (noticeable exceptions are Friebel and Guriev, 2006 and Tamura, 2010, as surveyed by Mahmoud and Trebesch 2010). Yet, it is important to study the industrial organisation of human smuggling, notably smugglers’ pricing and supply of services, to explore what type of economic policies can be implemented to fight against them.

Fighting human smuggling with the right policies:… //

… Sanctions the illegal employers:

However, effective migration control combined with legalisation should involve reinforcing sanctions paid by employers of illegal migrants rather than border controls. Today’s discrepancies between investments in external and internal controls are strikingly huge and studies have cast strong doubts on the effectiveness of prevailing border enforcement measures. Moreover new technologies allow firms to verify easily the status of workers before employing them, such as the E-Verify system in the US. Systematic controls of undocumented workers are a much more promising means of controlling illegal migration than border enforcement.

Although this policy will be a more cost-effective way to combine legalisation with migration control than reinforcing border controls, it will typically encounter strong resistance from powerful lobbies as already observed in the US with the E-Verify system, which remains non-compulsory. This also suggests that the status quo reflects complex political-economy issues with some people benefiting more than others from lax enforcement. All these considerations explain why, under current policies, smuggling business is booming and a large number of illegal migrants still bears the costs of being exploited in destination areas and face the constant risk of being deported.
(full text and References).

Links:

A new measure of the global middle class, on VOXeu.org, by Shimelse Ali and Uri Dadush, June 2, 2012;

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