This article examines the labor market impacts of the Permiso Especial de Permanencia (PEP) granted to nearly half a million undocumented Venezuelans in Colombia in August 2018. PEP is a resident visa (renewable every two years) that permits the holder to work and to access basic public services (health, education and, if they qualify, anti-poverty social programs). Initially, PEP was targeted to Venezuelan immigrants who had valid documentation; 182,000 permits were granted to documented Venezuelans in two waves in January 2017 and February 2018. Following a nationwide census of undocumented Venezuelan immigrants living in Colombia conducted between April and June 2018, the Registro Administrativo de Migrantes Venezolanos (RAMV), the government extended the PEP program to undocumented Venezuelan immigrants who had registered in the RAMV and had valid Venezuelan citizenship documents.
RAMV respondents were presumably more vulnerable than legal migrants. RAMV data reveal that: there is large variation in the educational attainment of undocumented Venezuelan migrants (although the majority have completed secondary education); undocumented Venezuelan migrants face tight labor market conditions (they have higher unemployment rates than the average Venezuelan migrant in Colombia, and their educational qualifications and professional experience are generally not recognized); the largest proportion (36 percent) work in services and sales; they have low access to education and health services; they want to stay in Colombia even though the majority still have many household members in Venezuela; nearly half have access to networks in Colombia; and the majority (73 percent) are of working age.
Sixty-four percent of undocumented migrants who registered in the RAMV actually received a PEP. Compares to those who did not receive a PEP, PEP holders tended to: be more educated, and more likely to have their degrees and experience officially recognized; more integrated into the labor market, especially the informal labor market; have weaker social networks in Colombia; and have more children and less access to health care.
The authors examine the impact of the PEP program on weekly hours worked, monthly wages, employment, and labor force participation in both the formal and informal sectors for three samples of workers: (a) Colombian natives; (b) Venezuelan migrants; and (c) Colombian workers who returned to Colombia over the past five years. The analysis uses confidential RAMV administrative data on the number of undocumented immigrants who obtained PEP status, linked to department-level (state-level) labor market outcomes—based on monthly household and labor-force surveys administered between January 2017 and February 2020.
The authors employ a difference-in-differences method that compares departments with different treatment intensity (i.e. the share of Venezuelans receiving the PEP visa in each department) before and after the beginning of the PEP program for undocumented Venezuelan immigrants in August 2018. To address the possibility that Venezuelans select settlement locations based on location-specific preferences, the authors employ an instrumental variable approach (using three different instrumental variables).
- The authors do not find any significant effects of the PEP program for undocumented Venezuelan immigrants on hours worked, wages, or labor force participation of Colombian workers in the formal or informal sectors. Neither are there any significant effects of the program on the employment rate of Colombian workers in the informal sector.
- The PEP program for undocumented Venezuelan immigrants is found to have a negative effect on the employment rate of Colombian workers in the formal sector, but this effect is negligible. The impact on formal employment rates is concentrated among highly educated and female workers. The disproportionate effects of the PEP program on educated workers may be explained by the fact that Venezuelan workers are, on average, more educated than Colombian workers.
- There is a positive effect of the PEP program on the formal employment rate of Venezuelan workers, however the effect is small.
The authors suggest several explanations for these results:
- The main motive of undocumented Venezuelan immigrants for applying for the PEP program was to access public services, and not to switch jobs from the informal to the formal sector where they would be required to pay taxes (they may not be aware of the wage premium in the formal sector).
- PEP holders may be unable to secure employment in the formal sector due to the reluctance of potential employers to hire Venezuelan migrants (even with knowledge of PEP).
- The increase in labor supply of immigrants in the formal sector creates other general equilibrium effects (e.g. increase in aggregate demand, or skill complementary with natives) that have a positive effect on the labor market outcomes of Colombian workers that cancel out any negative effects due to increased competition in the formal labor market.
- The time horizon (14 months) may be too short to observe any large impact of the program.