scholarly journals What drives the spatial wage premium in formal and informal labor markets? The case of Ecuador

2020 ◽  
Vol 60 (4) ◽  
pp. 823-847 ◽  
Author(s):  
Alessia Matano ◽  
Moisés Obaco ◽  
Vicente Royuela
Keyword(s):  
Labor Markets ◽  
Wage Premium ◽  
Informal Labor ◽  
Informal Labor Markets

scholarly journals Immigration, Wages and Employment under Informal Labor Markets

2021 ◽  
Author(s):  
Lukas Delgado-Prieto
Keyword(s):  
Labor Markets ◽  
Formal Sector ◽  
Informal Workers ◽  
Informal Labor ◽  
Wage Effect ◽  
Wage Effects ◽  
Market Impacts ◽  
Negative Effect ◽  
Informal Labor Markets ◽  
High Degree

This paper studies the labor market impacts of a massive inflow of Venezuelans in Colombia. By comparing areas that received different shares of migrants, I find a negative effect on wages and on local employment for natives. The negative wage effect is driven by a large drop of wages in the informal sector, where migrants are mostly employed, while the negative employment effect is driven by a reduction of employment in the formal sector, where the minimum wage is binding. To explain these results, I develop a model in which firms hire formal and informal workers with different costs. If these workers have a high degree of substitutability, and wages for formal workers are rigid, firms reallocate formal to informal employment as a response to lower informal wages. In settings with informal labor markets migration can therefore lead to asymmetric employment and wage effects across the informal and formal sectors.

Sign in / Sign up

Export Citation Format

Share Document