South African authorities are attempting to limit inflows of illegal
immigrants. Evidence for the United States presented in Dixon et al
(2011) suggests that a policy-induced reduction in labour supply from
illegal immigrants generates a welfare loss for legal residents. I use a
similar labour market mechanism within a dynamic CGE model for South
Africa, but take into consideration a number of well-known facts about the
local economy. With high unemployment rates among low skilled workers
and a legal minimum wage in place, I find a net gain in employment and
welfare for legal residents in South Africa when reducing the inflow of
illegal immigrants.