Political Economy, Sectoral Shocks, and Border Enforcement (Working Paper #44)

Gordon H. Hanson, University of California, San Diego & NEBR

Antonio Spilimbergo, International Monetary Fund

Abstract: In this paper, we examine the correlation between sectoral shocks and border enforcement in the United States. Enforcement of national borders is the main policy instrument the U.S. government uses to combat illegal immigration. We see whether border enforcement falls following positive shocks to sectors that are intensive in the use of undocumented labor, as would be consistent with political economy models of illegal immigration. The main finding is that border enforcement is negatively correlated with lagged relative price changes in the apparel, fruits and vegetables, and livestock industries and with housing starts in the western United States. This suggests that authorities relax border enforcement when demand for undocumented labor is high.

Working Paper #44ยป