The adverse effects of the visa exemption policy: evidence of immigration violations in Indonesia

Abstract

ABSTRACT The government of Indonesia recently introduced an extensive visa exemption policy to 169 countries. While the policy boosts international tourist demand, it may impose extra costs on the economy in the form of immigration violations. This study investigates the visa exemption policy effects on immigration violations in Indonesia. Using Difference-in-Differences (DD) estimation that exploits the staggered implementation of the visa exemption policy, this is the first study to provide empirical evidence for the heterogeneous impact of a country's visa exemption policy across regions, levels of development, and levels of income. We found that the visa exemption policy increased the immigration violations rate by 44.2% on average. In addition, the estimation suggested a heterogeneous effect between origins at the regional, developmental, and income levels. Nevertheless, our simple cost–benefit showed that the benefit of the visa policy may be higher than the cost.