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Immigration, wages, and employment under informal labor markets

Lukas Andres Delgado Prieto

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

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.

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: 2022-09-09
New Economics Papers: this item is included in nep-dev, nep-int, nep-iue, nep-lam and nep-ure
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