The Effects of Enforcement on Illegal Markets: Evidence from Migrant Smuggling along the Southwestern Border

Since 1986, enforcement along the Southwestern border has more than tripled. Using a unique dataset, the paper analyzes the effects of this dramatic increase on the illegal border crossing market. Controlling for endogeneity, increased enforcement has reduced illegal migration by only 10 percent, while increasing the prices charged by migrant smugglers (“coyotes”) by 30 percent. Few migrants have switched to smugglers, but the demand for border smugglers is more price elastic than the demand for illegal drugs. Further evidence shows that illegal migrants have substituted away from heavily patrolled to more remote crossing routes. The resulting additional migration costs are roughly three times the direct effect of enforcement on smuggling prices.