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 2023Abstract
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 enter 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 emphasize the importance of firms in shaping workers' adjustments to immigration.
- Monopsony Power and Firm Organization (with Álvaro Jáñez)
Alvaro’s JMPAbstract
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 and Local Labor Markets: Evidence from Hard Discount Stores (with Andrés Calderón & Andrea Otero-Cortés)
Listed in Banco de la República-DTSERUAbstract
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 spillovers from retail to manufacturing and construction. 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.
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
- Firms, Regularization, and the Labor Market Integration of Migrants
- Immigration Shocks and Housing Dynamics: Evidence from Bogota (with Daniel M. Angel & Juan M. Jiménez)
Daniel’s JMP