Research

Working Papers

• Worker Responses to Immigration Across Firms: Evidence from Colombia
  Coverage: uc3nomics blog and PSE Migration policy briefs
  Winner of the Best Immigration Economics Paper at OECD Immigration Conference 2023
  Abstract

  The labor market effects of immigration on natives depend on how firms respond, yet this aspect remains unexplored in developing countries. This paper examines the mass influx of Venezuelan migrants into Colombia using matched employee-employer data. As immigrants concentrate in the informal sector, formal employment for minimum-wage natives declines, reflecting their substitutability with lower-cost informal workers. Given their reliance on informality, negative employment and wage impacts are more pronounced in small formal firms. A machine learning algorithm indicates that firm rather than worker characteristics drive the heterogeneous impacts. These findings help to determine how firms shape workers' adjustments to immigration.

• Monopsony Power and Firm Organization (with Álvaro Jáñez)
  Alvaro’s JMP
  Abstract

  Labor market competition drastically differs for production workers and managers. For instance, in Portugal, there are half as many firms competing for managers as for production workers in the typical local labor market. Using administrative data from Portugal together with a general equilibrium model of oligopsony that incorporates minimum wages and management delegation, we show that monopsony power by firms leads to a welfare loss of 5.7% for production workers and 23.1% for managers relative to an efficient economy. Production workers bear smaller losses because they often work in markets with more competitor firms, view firms as closer substitutes, and are more affected by the minimum wage. The weak monopsony power of low-wage firms over production workers implies that raising the statutory minimum wage reduces overall welfare and affects managers through worker reallocation and delegation adjustments. Moving from the benchmark to an occupation-based minimum wage that optimally addresses monopsony power increases welfare by about 0.2% for both occupations.

• Retail Expansion in Developing Countries: Evidence from Hard Discount Stores (with Andrés Calderón & Andrea Otero-Cortés)
  Listed in Banco de la República-DTSERU
  Abstract

  Hard discount stores have reshaped the retail sector by offering low-cost products. While this business model has gained a significant market share in many countries, how it impacts the labor market remains unclear. To address this, we analyze their rapid expansion in Colombia using administrative and survey data. Our findings show that post discounters' entry, local formal employment increases by 10% on average, with strong spillovers from retail to manufacturing. Consistent with this, we find an increase in local tax revenues from manufacturing and commerce activities. These results suggest that hard discount stores can foster formalization in developing countries.

• Firms, Regularization, and Immigrant Integration
  Abstract

  This paper examines the labor market integration of millions of migrants in Colombia during a large-scale regularization, focusing on how firms shape these dynamics. Using matched employee-employer data for the universe of regularized migrants in the formal sector, along with household survey data covering the informal sector, I uncover substantial disparities. The most pronounced one is related to informality: migrants are nearly twice as likely to work informally as comparable natives. Despite regularization amnesties, only 10% of regularized migrants had formal jobs by 2021. Those entering the formal sector typically work in minimum-wage jobs and within small, low-paying firms, earning around half the wages of comparable natives. Close to 50% of the overall wage gap between them is due to the differential migrant sorting into firms with lower pay policies. While there are improvements as migrants gain formal sector experience, a persistent gap remains across various job and firm characteristics. Finally, I discuss why formalization rates remain low despite migrants' similar language, culture, education, and access to work permits. Regularized migrants have lower attachment to formal employment and higher firm mobility, which may reduce employers' incentives to hire them.

Publications

• Immigration, Wages, and Employment under Informal Labor Markets
  Listed in UC3M working paper series, SocArxiv and RieC
  Journal of Population Economics (2024) Vol 37, Art 55.
  Abstract

  This paper studies the labor market impacts of the Venezuelan immigration in Colombia. Exploiting spatial variation in exposure, I find a negative effect on native wages driven by the informal sector (where immigrants are concentrated) and a reduction in native employment in the formal sector (where the minimum wage binds for many workers). To explain this, I build a model in which a firm substitutes formal for informal labor in response to lower informal wages. Consistent with the model's predictions, I document that the decrease in formal employment is driven by small firms that use both labor types in production and by workers earning the minimum wage.

Work in Progress

• Immigration Shocks and Housing Dynamics: Evidence from Bogota (with Daniel M. Angel & Juan M. Jiménez)
  Daniel’s JMP
• Pitfalls of Common Estimators for Continuous Treatments (with Jan Stuhler)

Policy Reports

• World Bank Reports.
  A Path to Inclusive Growth in the EU amid Inflation and Fiscal Constraints (2024).
  Energizing Europe–Inclusive Growth: Inflation Chipping Away the Gains from Inclusion (2023).
  Energizing Europe–Rising to the Challenge (2023).