The (Option-)Value of Overstaying - Economics Seminar

Event Date: 2 March 2022

Speaker: Romuald Meango,  Associate Professor and Tutor Fellow (Official Student) at Christ Church, University of Oxford

Time: 4-5:30pm

Location: Please contact Rachel Hill (r.hill@strath.ac.uk) for Zoom details

Abstract: 

The objective of this paper is to calculate asylum seekers’ ex ante returns on overstaying when their application is rejected. It takes advantage of a unique survey designed to permit estimation of a structural model about the decision to overstay. The proposed model sees this decision as a utility maximization problem with uncertainty about the final choice. The paper proposes mild conditions for nonparametric identification of several objects of interest, including population distribution of ex ante non-pecuniary costs, surpluses, and option-value created by the chance of becoming regularized in the future. Estimation is conducted using a semiparametric estimation procedure on a sample of Afghan asylum seekers. Ex ante surpluses of overstaying are predominantly positive but very heterogeneous in the population. The pecuniary benefits explain a modest part of these surpluses. In contrast, the option-value and the cost associated with a deportation are important components of the expected returns. Afghan asylum seekers are ready to spend a long time with a precarious status to eventually obtain the right to stay and the amenities associated with it.

Published: 19 January 2022