What are the implications of granting working rights to forced migrants in their hosting economies? Despite the alarming size of forced migrant flows, which reached almost 80 million people in 2019, few hosting economies provide them with full work permits. The process of obtaining a work permit, if it even exists, often involves large amounts of red tape and rigid eligibility criteria due to fears of political backlash.
A new study examines the labour market impacts of a large-scale amnesty programme that granted work permits to nearly half a million Venezuelans in Colombia during the fall of 2018. This renewable two-year visa, known as the ‘Permiso Temporal de Permanencia’ (PEP for its Spanish acronym), granted undocumented Venezuelan immigrants the legal right to work as well as access to basic public services.
Unlike other cases of countries granting regular migratory status on a large scale to undocumented migrants, access to the PEP programme was not conditional on any eligibility criteria aside from having registered in the aforementioned survey.
The analysis focuses on the impacts of the programme on weekly hours worked, monthly wages, employment, and labour force participation of Colombian workers. The empirical strategy compares labour outcomes between departments with different average time windows to register in the programme online, before and after the programme was rolled out in August 2018. The analysis shows that the departments that had longer average time windows also had a disproportionately high number of PEP holders.
The researchers do not find any large or significant effects of the PEP programme on any of the outcomes that they study, except for the case of formal employment. Particularly, they observe that when the share of PEP holders to working age population increases in 1%, the formal employment rate increases by 0.6 percentage points. These effects are predominantly concentrated on the employment rates of highly educated women.
Considering that the migrants registered at the RAMV were undocumented in Colombia, even with the PEP, it may take a while for them to validate their education in Colombia (if possible at all). As such, in the short run, migrants are likely able to join the formal sector only in lower-tier jobs, possibly giving high skilled women the opportunity to go back to work, as migrants are hired for domestic services.
Interestingly, there are no signs of any displacement effect of the migrant's regularisation on native workers, as the study does not distinguish any significant effects of the programme on hours worked, wages, or labour force participation for the formal or informal sectors; nor do the researchers observe changes on the employment rate of Colombian workers in the informal sector.
Why the limited effects of the programme?
These results are not explained by lower-than-expected take-up rates for undocumented migrants deemed eligible for regularisation. Following August 2018, 64% of registered irregular immigrants applied and received a PEP visa. There are several explanations for these results.
The first is that the composition of the labour force supply remained unchanged after the rollout of the programme. In other words, PEP holders' main motive for obtaining the new migratory status was to access public services, such as health and education for themselves and their dependants, and not to switch jobs from the informal to the formal sector.
Forced migrants, for instance, may already have a job in the informal sector – which is large in Colombia – and may not perceive any benefits from becoming formal employees. In fact, migrants may perceive that getting a formal job only means the additional cost of paying taxes. Although the estimates suggest that formal workers in Colombia earn almost twice the wages of informal workers, migrants may not be aware of the existing wage premium.
Another possibility arises from labour demand dynamics; migrants may be trying to get a formal job, but they are unable to get one. For instance, it is unclear whether Colombian firms will offer a formal job to migrants, or even if the firms have information on what a PEP is and the fact that it is indeed a valid work permit. The authors’ conversations with Colombian local officials working in the programme implementation are consistent with this possibility being part of the explanation.
The third possibility is that the sudden increase in labour supply of immigrants in the formal sector creates other general equilibrium effects (e.g., increase in aggregate demand, or skill complementarity with natives) that result in dynamics such that the study does not observe negative labour market effects. In fact, the null effect the researchers find is in line with other studies on the effects of inflows of migrants on labour market outcomes.
Presenting author:
Sandra V. Rozo
Assistant Professor, USC Marshall School of Business
Twitter: @svrozo
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Paper co-authors:
Ana María Ibañez
Principal Economic Advisor, Inter-American Development Bank
http://www.anamariaibanez.net/
Twitter: @anamibanez
Dany Bahar
Senior Fellow, Brookings
https://www.brookings.edu/experts/dany-bahar/
Twitter: @dany_bahar