This paper analyzes the determinants of the location decisions of Venezuelan migrants and the effect of Venezuelan migrants on the labor market outcomes of Ecuadorian natives. In the first quarter of 2019, when this analysis was undertaken, more than 470,000 Venezuelan migrants were living in Ecuador, equivalent to about 3.7 percent of the country’s population. More than half of Venezuelan migrants settled in four (out of 221) regions (cantons).
The analysis exploits the variation in the settlement pattern of Venezuelan migrants across regions in Ecuador, comparing labor market outcomes in regions that received Venezuelan migrants relative to regions that did not, before and after the migrant influx. The analysis combines data from Ecuador’s household labor force survey with novel data from mobile phone records to measure the geographic distribution of Venezuelan migrants across cantons.
- Venezuelans’ choice of settlement location has been driven by local economic conditions. Venezuelan migrants are geographically mobile and have mainly chosen to locate in higher income regions. The point of entry into Ecuador explains only a small part of the regional distribution of Venezuelan workers.
- Overall, regions with the largest inflows of Venezuelans have not experienced any effects on labor market participation or employment, compared to regions with fewer inflows.
- High concentrations of Venezuelan migrants relative to the canton’s population are associated with displacement of women out of the labor market and a worsening of the quality of employment and wages for young, low-educated workers. Compared to similar workers in regions with a small inflow of Venezuelans (relative to population), young, low-educated Ecuadorian workers in high-migration regions have experienced a 5-percentage point increase in the rate of informality, and a 13-percentage point reduction in hourly earnings.
The authors conclude that newly arrived Venezuelan migrants have found employment mainly in informal jobs, placing the burden of the adjustment disproportionately on the more vulnerable workers in the main host regions (such as women and low-educated youth). The authors recommend targeted interventions to alleviate the negative effects on these groups of workers in host regions with a view to reducing the likelihood of conflict, facilitating the integration of the migrants, and realizing the positive effects of migration that may materialize in the long run.