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Immigration, wages, and employment under informal labor markets

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  • Delgado Prieto, Lukas Andres

Abstract

This paper studies the labor market impacts of Venezuelan immigrants in Colombia. Exploiting spatial variation in exposure, I find a negative effect on native wages driven by the informal sector (where immigrants are concentrated) and a reduction in native employment in the formal sector (where the minimum wage binds for many workers). To explain this asymmetry, I build a model in which firms substitute formal for informal labor in response to lower informal wages. Consistent with the model's predictions, I document that the increase in informality is driven by small firms that use both labor types in production.

Suggested Citation

  • Delgado Prieto, Lukas Andres, 2022. "Immigration, wages, and employment under informal labor markets," UC3M Working papers. Economics 35664, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:35664
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    Cited by:

    1. Lebow, Jeremy, 2024. "Immigration and occupational downgrading in Colombia," Journal of Development Economics, Elsevier, vol. 166(C).
    2. Celia P. Vera & Bruno Jiménez, 2022. "The Short-Term Labor Market Impact of Venezuelan Immigration in Peru," CEDLAS, Working Papers 0304, CEDLAS, Universidad Nacional de La Plata.

    More about this item

    Keywords

    Immigration;

    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
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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