Living with the Neighbors: The Effect of Venezuelan Forced Migration on Wages in Colombia

Leonardo Peñaloza-Pacheco

Journal for Labour Market Research, Volume 56 (2022), Article 14

https://labourmarketresearch.springeropen.com/articles/10.1186/s12651-022-00318-3

Review

This paper investigates the impact of Venezuelan migration on the labor market in Colombia between 2013 and 2019. By 2019, there were nearly 1.8 million Venezuelan migrants living in Colombia, increasing the share of Venezuelans living in Colombia relative to the national population from 0.07 percent in 2015 to 3.6 percent in 2019.

The author exploits the variation in the settlement of Venezuelan migrants across regions in Colombia, comparing the evolution of labor market outcomes across regions with varying levels of exposure to Venezuelan migrants, before and after 2016. The author also examines effects in the two regions bordering Venezuela (a Guajira and Norte de Santander), compared to similar regions that did not receive large numbers of migrants (Antioquia, Caquetá, and Chocó). In the second half of 2016, a large and unexpected influx of Venezuelans to Colombia occurred when the borders between the two countries were reopened after about a year of being closed. Most Venezuelan migrants settled in regions near the border.

The analysis relies on several data sources, as follows: (1) labor and socioeconomic data from the Great Integrated Household Survey (GEIH) conducted by the Colombian National Statistical Office (DANE) from April 2013 to December 2019; (2) data on migratory flows of Venezuelans in Colombia from the Migration Unit (Unidad Administrativa Especial de Migración Colombia, UAEMC) for the period 2012-2019; and (3) data on the numbers of Venezuelans living irregularly in Colombia from the Registro Administrativo de Migrantes Venezolanos (RAMV).

The data reveals that, on average, Venezuelan migrants are about 6 years younger than Colombian natives. The proportion of high-skilled workers among Venezuelan migrants is almost 7 percentage points higher than in the Colombian population. Nevertheless, Venezuelans most likely increased competition in the labor market for less skilled individuals, due to labor market barriers that prevent qualified Venezuelan immigrants from accessing high-skill jobs.

Main results:

  • The large influx of Venezuelan migrants caused a decline in aggregate wages and employment of low-skilled workers in Colombia. A 1 percentage point increase in the labor force due to the inflow of Venezuelans generated a 0.4 percent decrease in wages and a 0.1 percentage point decrease in employment for low-skilled workers (equivalent to a decrease of 0.18 percent relative to the average employment rate of low-skilled Colombian workers in 2015).
  • The decline in wages was larger for low-skilled workers (defined as individuals with less than a secondary-level education). A 1 percentage point increase in the share of Venezuelan immigrants led to a 0.6 percent decline in wages for low-skilled workers. Additionally, the informality rate for low-skilled workers increased by 0.1 percentage points (equivalent to an increase of 0.12 percent relative to 2015 baseline values).
  • The decline in wages was larger for informal workers (defined as individuals without employer contributions to a pension fund or contributory health plan). On average, a 1 percentage point increase in Venezuelan immigration led to a 0.5 percent decrease in wages for informal workers compared to 0.2 percent for formal workers (although the latter result is not statistically significant under more conservative standard errors).
  • There is a stronger decline in the real wage for men than for women, consistent with a traditional role assignment within households. Results indicate a stronger decline in the hourly wage and employment for men compared to women across the country.
  • Effects were larger in regions located on the border with Colombia. In La Guajira and Norte de Santander, declines in wages and employment for all workers were approximately 10 percent and 3.4 percentage points (a decrease of 5.6 percent on employment relative to 2015 average employment), respectively. The decline in wages for low-skilled workers was 5.4 percentage points greater than that experienced by high-skilled workers. Informal workers’ wages fell by approximately 12.2 percent due to Venezuelan migration (there was no statistically significant difference with formal workers).

These results are consistent with other studies indicating the ‘occupational downgrading’ of migrants and refugees, that is regardless of educational attainment and skill level, migrants and refugees frequently work in low-skilled jobs, generating pressure on real wages in this segment of the labor market. In his conclusion, the author recommends public policies to mitigate adverse effects of immigration on labor market outcomes of native workers. Additionally, integration and regularization policies for Venezuelan immigrants would be crucial to take advantage of the potential gains from the Venezuelan exodus in terms of human capital.

Pin It on Pinterest