Immigrants, Legal Status, and Illegal Trade

McCully, Brett (2021): Immigrants, Legal Status, and Illegal Trade.

Abstract

Nearly $2 trillion of illegally trafficked goods flow across international borders every year, generating violence and other social costs along the way. Due to the absence of legal contracts and the challenge of finding trading partners in an illegal market, traffickers may rely on co-ethnic networks to facilitate trade. In this paper, I use novel microdata on the universe of large illegal drug confiscations in Spain to provide the first causal estimates of how immigrants and immigration policy affect the pattern and scale of illegal drug trafficking. I find that immigrants increase both illegal drugs imported from and exported to their origin country, with irregular immigrants raising illegal drug imports. Doubling the number of immigrants from an origin country raises the likelihood of illegal drug imports from that country by 8 percentage points. I find suggestive evidence that granting legal status to immigrants reduces illegal drug imports.

• Item Type: MPRA Paper
• Language: English
• Keywords: Immigration, Drug Trafficking, Trade, Legal Stutus
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration; J - Labor and Demographic Economics > J1 - Demographic Economics > J15 - Economics of Minorities, Races, Indigenous Peoples, and Immigrants ; Non-labor Discrimination; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law

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