We examine the effects of anti-illegal migration and anti-migrant exploitation efforts on the people smuggling market where migrants face the risk of post-migration exploitation by their smugglers. We find that insufficiently resourced anti-illegal migration efforts tend to result in an adverse selection equilibrium where only exploitative smugglers are employed at a low fee even though migrants are willing to pay nonexploitative smugglers a high fee. We suggest that an improvement in border apprehension of smugglers and their clients and an increase in the penalty for smuggling may be preferable because these are likely to reduce smuggling. In contrast, improved inland apprehension of smuggled migrants may increase the incidence of migrant exploitation while failing to decrease smuggling. Better inland apprehension of smugglers and increased penalty for exploitation convert exploitative smugglers into nonexploitative ones and hence are effective in fighting against exploitation but do not reduce smuggling.

Keywords: illegal migration, people smuggling, migrant exploitation, human trafficking,
adverse selection
JEL classifications: F22, J68, D82, L15, K42