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Instrumental Variables and Omitted Migrant Flows: Immigration and Emigration in Peru

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  • Díaz Rivera, Orlando Ángel

Abstract

Instrumental variables are often used to identify the causal effect of immigration on labor market outcomes of natives. In this paper, I investigate the sensitivity of 2SLS estimators in the (common) case where a simultaneous shock occurs to the unit of interest and we do not explicitly account for it. For this purpose, I estimate the effects of both the Venezuelan immigration shock and the Peruvian emigration during the last decades on the labor market outcomes of Peruvian native stayers. Using shift-share instruments, I document positive effects of both immigration and emigration on employment rates, household income, and household expenditure (with emigration effects being about eight times larger). Reassuringly for the literature, even in a context of instruments correlated with the omitted flow the point estimates are shown to be robust to the inclusion of the omitted variable.

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  • Díaz Rivera, Orlando Ángel, 2025. "Instrumental Variables and Omitted Migrant Flows: Immigration and Emigration in Peru," UC3M Working papers. Economics 47870, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:47870
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    References listed on IDEAS

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    1. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    2. George J. Borjas, 2021. "Native Internal Migration and the Labor Market Impact of Immigration," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 10, pages 275-312, World Scientific Publishing Co. Pte. Ltd..
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