This paper analyses the impact of illegal migration on the optimal path of domestic (resident) consumption. The analysis draws two important conclusions. First, if illegal migrants and domestic labour are perfect substitutes, illegal migration necessarily lowers the long-run per capita consumption of domestic residents. Second, if illegal migrants and domestic labour are imperfect substitutes, the effect on the long-run per capita domestic consumption is ambiguous, however, in the Cobb–Douglas case, the result is clear cut and per capita domestic consumption rises as a result of illegal migration.
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