The distributional effect of a massive exodus in Latin America and the role of downgrading and regularization

Carlo Lombardo, Julian Martinez-Correa, Leonardo Peñaloza Pacheco and Leonardo Gasparini
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Julian Martinez-Correa: CEDLAS-IIE-FCE-UNLP
Leonardo Peñaloza Pacheco: CEDLAS-IIE-FCE-UNLP
Leonardo Gasparini: CEDLAS-IIE-FCE-UNLP
Authors registered in the RePEc Author Service: Leonardo Peñaloza-Pacheco

CEDLAS, Working Papers from CEDLAS, Universidad Nacional de La Plata

Abstract: The massive displacement of Venezuelan citizens to Colombia is the second most important episode of forced migration in the world. We study the impact of this demographic shock on the Colombian income distribution exploiting the geographical heterogeneity in the intensity of migration. We use RIF regressions in an instrumental variables approach to account for the non-random pattern of location of immigrants. We find that despite the fact that Venezuelan immigrants are relatively skilled compared to native Colombian workers, the exodus had a larger negative effect on the lower tail of the wage distribution, implying increases in income inequality and poverty. We link this result to a sizeable downgrading of (mostly unregistered) Venezuelan recent migrants who work in more routine tasks and earn lower wages than natives with similar characteristics. We also explore a large regularization program for immigrants and find that it was associated to a reduction in the extent of downgrading, and hence, to a mitigation of the unequalizing impact of the exodus.

JEL-codes: F14 F16 F22 F23 J61 L60 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021-11
New Economics Papers: this item is included in nep-dev, nep-int, nep-lam, nep-ltv, nep-mig and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:dls:wpaper:0290

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