Do Immigrants Bring Fiscal Dividends?: The Case of Venezuelan Immigration in Colombia

Oscar Valencia (), Matilde Angarita, Juan Santaella and Marcela De Castro

No 10958, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper analyzes the effects of recent Venezuelan immigration to Colombia on the fiscal balance, the labor market, and economic growth. For this purpose, we built a dynamic general equilibrium model with a search and matching structure in the labor market. The higher fiscal spending to address immigration negatively impacts the government's budget in the short term, which is offset by higher output, consumption, and employment level, increasing the government's revenues mainly through indirect tax collection. The effect on the labor market is different for unskilled workers--whose higher supply generates a negative effect on wages and an increase in the unemployment rate--and skilled workers, who benefit from higher wages and lower unemployment. These changes in the labor market affect the government's revenue, resulting, in the long term, in positive fiscal dividends of migration.

Keywords: Fiscal policy; Migration; labor market; Unemployment (search for similar items in EconPapers)
JEL-codes: E62 H24 J61 (search for similar items in EconPapers)
Date: 2020-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://publications.iadb.org/publications/english ... tion-in-Colombia.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:10958

DOI: 10.18235/0002993

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().