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Immigration, Wages, and Employment under Informal Labor Markets

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  • Delgado-Prieto, Lukas

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.

Suggested Citation

  • Delgado-Prieto, Lukas, 2021. "Immigration, Wages, and Employment under Informal Labor Markets," SocArXiv acr4v_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:acr4v_v1
    DOI: 10.31219/osf.io/acr4v_v1
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