The Research Seminar in Economics is a platform for invited speakers to present their current research, thereby facilitating the exchange between speakers and faculty members of the City University of London.
It covers empirical as well as theoretical contributions across all fields of economics. The Research Seminar in Economics is usually held weekly during the academic term.
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The (Option-)Value of Overstaying
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.
Romuald Meango (Oxford University)
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