Shoring Up Economic Refugees: Venezuelan Migrants in the Ecuadoran Labor Market

Review

This paper analyzes the labor-market conditions of around 340,000 Venezuelan displaced abroad, who migrated to Ecuador between 2016 and the summer of 2019. The analysis is based on new data from the Survey of Migrants and Receiving Communities in Ecuador (Encuesta a Personas en Movilidad Humana y en Comunidades Receptoras enEcuador, EPEC) covering Venezuelan migrants who arrived in Ecuador after January 2016 as well as Ecuadorans living in the same localities (1900 households in total).

 

Key findings:

  • Venezuelan migrants (between 2016 and the summer of 2019) represented 2 percent of Ecuador’s population (and 3 percent of the labor force), reaching much higher concentrations in several provinces.
  • Venezuelan migrants are younger and more educated than Ecuadorian natives. Venezuelans have an average age of 32 years-5 years younger than the average Ecuadorian. The proportion of individuals with low educational attainment (at most primary education) is 22 percentage points lower for Venezuelan migrants than for Ecuadorians. The proportion of college-graduates is 27 percentage points higher for Venezuelans than for Ecuadorians.
  • Venezuelan migrants have very high employment rates, about 17 percentage-points higher than Ecuadorians in the same locality, and account for 3 percent of Ecuador’s employment.
  • The quality of employment is much lower for Venezuelan workers than for natives, characterized by high informality and temporality, higher weekly work hours, and lower wages, despite higher educational attainment. The informality rate for Venezuelan workers is 15 percentage points higher and they are 29 percentage-points more likely to have temporary contracts. Venezuelan workers were 6 percentage-points more likely to be underpaid by their employers. Venezuelan migrants work 5.5 hours more than the average native worker, but their average monthly earnings are 36 percent lower. The native-immigrant gaps in quality of employment and earnings are much larger among workers with higher education levels, suggesting that college-educated Venezuelans are unable to access high-skill, high-productivity jobs.
  • There is a high degree of occupational downgrading. 72 percent of the Venezuelans who migrated to Ecuador report that their skills were used more productively in their jobs back in Venezuela.

These findings have two important implications: (1) the skills of many Venezuelan migrants are vastly underutilized; and (2) the brunt of the adjustment to the inflows of Venezuelan workers has fallen disproportionately on the lower paid and least skilled Ecuadorian workers in the main receiving areas.

The authors use the data to simulate the impact of: (a) providing legal work permits to all Venezuelan workers; and (b) adopting measures that allow Venezuelan workers to obtain employment that matches their education level or their pre-migration occupation. These simulations demonstrate that:

  • If Venezuelans are provided with work permits, the rate of informal employment among Venezuelans would fall substantially and, as a result, average wages for Venezuelan migrants are likely to increase (by 9 percent to 18 percent depending on education levels).
  • If Ecuador’s government adopts measures that allow Venezuelan workers to obtain employment that matches their education level or their pre-migration occupation (e.g. administrative actions to facilitate Venezuelans’ educational credentials), then Ecuador’s GDP would increase between 1.6 percent and 1.9 percent. In addition, this policy would help shift the burden of adjustment away from the more economically vulnerable native workers.

 

The authors conclude that, given the high educational attainment of Venezuelan migrants and the cultural and linguistic proximity between them and the Ecuadorian population, there are promising policy actions that can generate substantial economic gains for Ecuador and, at the same time, shift the burden of adjustment away from the most vulnerable segments of the labor market.

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