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Misallocation of the Immigrant Workforce: Aggregate Productivity Effects for the Host Country

Author

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  • José Pulido

    (Banco de la República de Colombia)

  • Alejandra Varón

    (Universidad de los Andes)

Abstract

Mass migrations can impact the amount of labor misallocation in the host country if immigrants, relative to natives, face more frictions that prevent them from working in their preferred occupations. The resulting misallocation would imply an aggregate productivity loss in the short run while migration occurs, but an subsequent lapse of productivity growth when the immigrants start to be assimilated by the labor market. We study the case of Colombia during 2015-2019, a period when the country received a massive inflow of migrants from Venezuela. Through the lens of a Roy model of occupational choice with two types of frictions - discrimination and barriers preventing workers from choosing their preferred occupations - we quantify the extent of occupational misallocation for immigrants, and its implications for Colombian aggregate labor productivity. Our estimates indicate that both type of frictions significatively misallocate Venezuelan immigrants. Removing those frictions would lead at least one third of immigrants to reallocate, permanently increasing Colombian aggregate productivity by 0.9%. **** RESUMEN: Las migraciones masivas pueden aumentar la ineficiencia en la asignación del trabajo en el país anfitrión si los trabajadores inmigrantes, en relación con los nativos, enfrentan más fricciones en el mercado laboral que les impidan trabajar en sus ocupaciones deseadas. La mala asignación resultante genera una pérdida de productividad agregada en el corto plazo mientras la migración ocurre, pero un crecimiento posterior cuando los inmigrantes se asimilen en el mercado laboral. En este artículo estudiamos el caso de Colombia durante 2015-2019, un período en el que el país recibió una afluencia masiva de migrantes desde Venezuela. A partir de un modelo de Roy de elección ocupacional con dos tipos de fricciones – discriminación laboral y obstáculos que obligan a los trabajadores a elegir ocupaciones distintas a las de su preferencia – cuantificamos el grado de mala asignación del trabajo de los inmigrantes y sus implicaciones sobre la productividad agregada laboral colombiana. Nuestras estimaciones indican que ambos tipos de fricciones generan asignaciones ocupacionales ineficientes para los migrantes, y que al eliminar dichas fricciones al menos una tercera parte de los trabajadores migrantes cambiaria de ocupación, lo que incrementaría la productividad colombiana en un 0.9% de forma permanente.

Suggested Citation

  • José Pulido & Alejandra Varón, 2020. "Misallocation of the Immigrant Workforce: Aggregate Productivity Effects for the Host Country," Borradores de Economia 1135, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:1135
    DOI: https://doi.org/10.32468/be.1135
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    Cited by:

    1. Ana María Tribín-Uribe & Achyuta Adhvaryu & Cesar Anzola-Bravo & Oscar Ávila-Montealegre & Leonardo Bonilla-Mejía & Juan Carlos Castro-Fernández & Luz A. Flórez & Ánderson Grajales-Olarte & Alexander , 2020. "Migración desde Venezuela en Colombia: caracterización del fenómeno y análisis de los efectos macroeconómicos," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 97, pages 1-74, October.
    2. Central Bank of Colombia, 2023. "The labour market in Colombia: trends, cyclical patterns and the role of wages in the recent inflationary surge," BIS Papers chapters, in: Bank for International Settlements (ed.), Inflation and labour markets, volume 127, pages 103-134, Bank for International Settlements.
    3. Mutis O, Olga María & Ríos I, Camilo José & Montaño G, Laura María & Monroy R, Vanessa, 2021. "Crisis u oportunidad: impacto de la migración venezolana en la productividad colombiana," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 89(1), pages 13-56, October.

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    More about this item

    Keywords

    Immigration; misallocation; Roy model; discrimination; productivity; Migración; asignación ocupacional; modelo de Roy; discriminación; productividad;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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