Abstract
Governments do not always enforce their laws, even when they have the means of doing so, and lax enforcement is common in the domain of immigration policy. To explain this paradox we develop a political agency model where gains from migration are unevenly distributed, and an elected government chooses both quotas and their enforcement. We show that distributional concerns can have perverse effects on migration policy since a utilitarian government may set a quota to appease the electorate, but then strategically under-invest in its enforcement. Under-investment is more likely, the larger the preference gap between median and average voter, and the higher the likelihood of a populist challenger gaining office. Our analysis also indicates that redistributive taxation reducing the share of enforcement cost borne by the median voter exacerbates the problem, whereas a compensatory tax rebate financed through a tax on profits from migration alleviates the conflict of interest, thus reducing illegal immigration.
Highlights
Enforcement plays a fundamental role in the implementation of many policies that rely on legally binding provisions, such as licensing, taxes, tariffs or quotas to regulate economic activities
Even countries with well developed institutional structures and legal apparatuses face enforcement problems. This is for example the case in the domain of immigration policy: while the regulation of international labor flows features prominently in the political agenda of most Western democracies, those very same countries seem unable to get to grips with the large numbers of undocumented aliens they host
Instead, illegal immigration only takes place when the number of migrants entering is higher than a binding official quota, and the phenomenon arises endogenously as the result of the migration policy chosen by the government, i.e. the combination of quotas and resources allocated to their enforcement
Summary
Enforcement plays a fundamental role in the implementation of many policies that rely on legally binding provisions, such as licensing, taxes, tariffs or quotas to regulate economic activities. The combination of uncertainty on the supply of migrants and asymmetric information on the preferences of the politician implies that the public cannot perfectly infer the politician’s type and the cause of illegal immigration, e.g. limited policy tools versus lax enforcement. In this environment, rational voters use outcome measures of performance – i.e. the total number of migrants in the country – to gauge the incumbent’s type.
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