Do You Want a Wall, Promote Economic Freedom : An Analysis of Illegal Immigration in the USA using Heteroscedasticity-Based Identification

This paper analyzes the economic freedom as a factor that encourages people to change their natural right of living in their countries of origin to bear the consequences of being unauthorized immigrants in the United States of America. We adapted Acevedo and Mora (2008) to include factors that encourage people to migrate illegally, our hypothesis states that if the expected benefits of remaining in their home countries are lesser than those of migrating illegally they will migrate. Using a gravity model and the heteroscedasticity-based identification methodology proposed by Lewbell (2012), our results show that the observed gap between the economic freedom of the country of origin and the United States is statistically significant and negatively related with illegal immigration. We conclude that our findings suggest that illegal immigrants could have a selection bias at the moment of coming to the United States, the economic freedom, for this reason promoting economic freedom in those countries could be a better policy to diminish the increasing number of unauthorized immigrants rather than other immigration restrictive policies