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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. 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.
    2. Andrea Otero Cortés & Oriana Alvarez & Karina Acosta, 2023. "Mercado Laboral y Pobreza en Barranquilla," Documentos de trabajo sobre Economía Regional y Urbana 323, Banco de la Republica de Colombia.
    3. Lukas Delgado-Prieto & Andrea Otero-Cortés & Andrés Calderón, 2024. "The Impact of Hard Discount Stores on Local Labor Markets: Evidence from Colombia," Documentos de trabajo sobre Economía Regional y Urbana 326, Banco de la Republica de Colombia.
    4. Lebow, Jeremy, 2024. "Immigration and occupational downgrading in Colombia," Journal of Development Economics, Elsevier, vol. 166(C).

    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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