Creating illegal immigrants

This paper considers the prospects for successful implementation by governm ents of guest-worker programs that are based on an intended temporary prese nce of foreign workers. A means of enforcement of temporary presence is a p enalty imposed for overstaying the permissible time period. Employers who a re obliged to post bonds for their foreign workers are provided with an inc entive to ensure that their workers leave at the end of their contractually specified stay. We consider the consequences of such a bond when foreign w orkers can leave legal employers for illegal employment. We also investigat e the effectiveness of deferred payments to foreign workers as a means of d iscouraging transition from legal employment to illegal presence. In the fi nal analysis, although the policy intention is a temporary stay, we conclud e that if foreign workers do not wish to return home, there is an almost in evitability to the creation of a population of illegal immigrants (whose pr esence may be subsequently legalized). JEL classification: F22, K42, P16.