Immigration, wages, and employment under informal labor markets

Lukas Delgado-Prieto ()
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Lukas Delgado-Prieto: Universidad Carlos III de Madrid

Journal of Population Economics, 2024, vol. 37, issue 2, No 20, 34 pages

Abstract: Abstract This paper studies the labor market impacts of the Venezuelan immigration 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, I build a model in which a firm substitutes formal for informal labor in response to lower informal wages. Consistent with the model’s predictions, I document that the decrease in formal employment is driven by small firms that use both labor types in production and by workers earning the minimum wage.

Keywords: Immigration; Event study; Labor market; Informality (search for similar items in EconPapers)
JEL-codes: F22 O15 O17 R23 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00148-024-01028-5

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