World Development 174 (2024) 106437 Contents lists available at ScienceDirect World Development journal homepage: www.elsevier.com/locate/worlddev Immigration, labor markets and discrimination: Evidence from the Venezuelan Exodus in Perú Andre Groeger a ,∗, Gianmarco León-Ciliotta b , Steven Stillman c a Universitat Autonoma de Barcelona (UAB) and Barcelona School of Economics (BSE), Spain b Universitat Pompeu Fabra (UPF), Barcelona School of Economics (BSE), and Institute of Political Economy and Governance (IPEG), Spain c Free University of Bozen-Bolzano, IZA, and CESifo, Italy, Germany and Germany ARTICLE INFO ABSTRACT Dataset link: Replication Data for: "Immigration Venezuela is currently experiencing the biggest crisis in its recent history. This has led more than 7.3 million , Labor Markets and Discrimination: Evidence f Venezuelans to emigrate, at least 1.5 million of those to Peru, which amounted to an increase of over 4 rom the Venezuelan Exodus in Peru" (Referenc percent in the Peruvian population. Venezuelan immigrants in Peru are relatively similar in cultural terms, e data) but, on average, more skilled than Peruvians. In this paper, we first examine Venezuelans’ perceptions of JEL classification: being discriminated against in Peru. Using an instrumental variable strategy, we document a causal relationship F22 between the level of employment in the informal sector – where most immigrants are employed – and reports of J15 discrimination. We then study the impact of Venezuelan migration on local’s labor market outcomes, reported O15 crime rates, and attitudes using a variety of data sources. We find that inflows of Venezuelans to particular R23 locations led to increased employment and income among locals, decreased reported crime, and improved Keywords: reported community quality. We conduct a heterogeneity analysis to identify the mechanisms behind these Immigration labor market effects and discuss the implications for Peruvian immigration policy. Forced migration Discrimination Labor markets Peru Venezuela 1. Introduction neighboring Colombia, Brazil, and Ecuador as their destinations, at the time, the Peruvian economy was experiencing sustained economic Crisis-driven migration flows have significantly increased in the past growth, thus about one million Venezuelans were attracted to the two decades (Bhabha, 2018). The arrival of a large number of migrants country. The pull factors were strengthened by the fact that the Pe- and refugees has triggered fierce political disputes over its impact on ruvian government facilitated the legal immigration of Venezuelans. local labor markets and has been at the center of much discussion in the This large inflow of immigrants potentially put pressure on local labor academic literature and in the media. While locals’ perceptions about markets, especially in urban areas, and increased the negative public the effects of immigration on the labor market determine their behavior discourse against immigrants in the media (Freier et al., 2021; Winter, and attitudes towards immigrants, the way in which these perceptions 2020). Some of these sources not only claimed that the large wave of are formed is less well understood. newcomers had led to an increase in unemployment, but also that it In this paper, we study the economic underpinnings of hostility had contributed to an upsurge in urban violence. and discrimination against Venezuelan immigrants in Peru prior to the Studying the economic underpinnings of discrimination against mi- Covid-19 pandemic.1 The current crisis in Venezuela has led about grants is typically hard since large migration waves affect the dynamics 7.3 million people to emigrate (R4V, 2023). This migration wave of the labor market, and the latter, in turn, affects discrimination. This intensified in 2017, when political instability added to the worsening implies that researchers need separate sources of exogenous variation to economic situation in the country. While many Venezuelans chose ∗ Corresponding author. E-mail addresses: andre.groger@uab.es (A. Groeger), gianmarco.leon@upf.edu (G. León-Ciliotta), steven.stillman@unibz.it (S. Stillman). 1 The pandemic had enormous impacts on the Peruvian labor market, on the inflows and outflows of Venezuelans from Peru, and the general functioning of the country. We believe including the post-pandemic period in our analysis would decrease the generalizability of our findings, since it is not possible to abstract from this enormous shock and still be able to shed light on our main questions of interest. https://doi.org/10.1016/j.worlddev.2023.106437 Available online 31 October 2023 0305-750X/© 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by- nc-nd/4.0/). A. Groeger et al. World Development 174 (2024) 106437 identify the causal effect of labor market outcomes on discrimination, It is possible that local shocks impact both the destination choice of as well as the effects of migration on the labor market. In this paper, we Venezuelans and outcomes for Peruvians, we thus use an instrumental use a specialized survey of Venezuelan immigrants in Peru to identify variable strategy where we instrument the number of Venezuelans in the causal effect of the quality of local labor markets on discrimina- a location with the presence of Venezuelans in that location in the tion against immigrants. Then, we turn to the economic determinants past, interacted with the year of observation. This is a semi-parametric of attitudes towards immigrants and study the flip side of the first version of the traditional migrant network instrument, as recommended analysis, namely, how the presence of immigrants affects Peruvians’ by Goldsmith-Pinkham et al. (2020), and allows the strength of the net- labor market outcomes, overall criminal activity, and their percep- work effect to potentially vary by year. An overidentification test can be tions of crime and their local community. In both analyses, the main used to examine whether the instrument has a consistent relationship identification issue is that Venezuelans are not randomly allocated to over time. specific locations in Peru and hence unobserved characteristics of both We find robust evidence that increased immigration from Venezuela the location and the Venezuelans there might be correlated with local has a positive impact on labor market outcomes for Peruvians, with economic conditions and individual outcomes for both Venezuelans and increased employment rates, incomes, and expenditures. Additionally, Peruvians in the same location. We account for this using different locations that receive more immigrants have lower levels of reported instrumental variables strategies combined with detailed controls on non-violent crime, improved reported quality of local services, greater the local economic environment. reported trust in neighbors, and higher reported community quality. In the first part of the analysis, we examine whether Venezuelans On the other hand, we find evidence that in locations with more who live in local areas with a stronger informal labor market experience Venezuelans, Peruvians report that their community likes diversity less. different levels of discrimination. A large majority of Venezuelans arriv- Taken together, our results imply that local labor markets in Peru ing in Peru have taken up jobs in the informal sector, directly compet- that are more informal are better able to adapt to large migration ing with relatively low-skilled native workers. To causally identify the inflows both in terms of migrant assimilation and the impacts on relationship, we use a shift-share instrumental variable strategy that ex- locals. While the migration of Venezuelans to Peru is quite specific, ploits local exposure to exogenous national-level export shocks (Jaeger this evidence suggests that there are perhaps unexpected downsides to et al., 2018). As informal employment and discrimination could both labor market formalization in less-developed countries. be related to other local characteristics, we also control for the local Our main contribution is to the recent literature on the impact industrial structure, household expenditure, population size, distance of crisis-driven migration in less developed countries.2 A large group from the capital and center of economic activity (Lima), and, impor- of studies in this literature has focused on examining the impact of tantly, the number of Venezuelans based in each location prior to the Syrian refugee immigration on natives in Turkey and Jordan. The current immigration wave, which we show to be a significant pull factor results show that these inflows of migrants and refugees reduce the for where Venezuelans choose to settle. employment and wages of low-skilled natives (Ceritoglu et al., 2017; Our results show that weaker informal labor markets lead to a Del Carpio & Wagner, 2015; Tumen, 2016). There is also a growing significant increase in the discrimination reported by Venezuelans in literature studying the effects of the current Venezuelan exodus on Peru. A 10% increase in the informal employment rate decreases dis- neighboring countries in Latin America. Results are more mixed than crimination by 6.6%, on aggregate. This effect is larger for men than in the Syrian case, and the diversity of the findings appear to relate to for women, with 7% and 5.8%, respectively. To put these numbers the conditions in the receiving economy.3 Unlike most of the previous into perspective, a 10% increase in the informal employment rate studies which find negative or null effects, we find that inflows of is equivalent to moving from the first to the third quartile of the Venezuelans to Peru lead to positive labor market effects for natives in distribution of informal employment rates across districts. The data general, with increased employment, incomes, and expenditures among we use also collects information on where discrimination occurs. We Peruvian households. We conduct a heterogeneity analysis by natives’ find that weaker informal labor markets lead to more discrimination gender and skill level to shed light on the mechanisms behind this against men in public places and on public transit. Instead, we do effect: the results suggest that the effects stem mainly from increased not find evidence of an impact on workplace discrimination for either informal employment among secondary-educated men and increased gender. This suggests that weaker informal labor markets generate formal employment among tertiary-educated men. High-skilled women generalized discrimination, rather than one that is workplace-based. also seem to benefit through increases in employment, potentially One interesting pattern is that more educated Venezuelans are more as a result of improved child care services provided by Venezuelan likely to report being discriminated against when informal employment immigrants. decreases. A potential explanation for this, which is consistent with the previous results, is that higher-skilled Venezuelans are disappointed with their situation in Peru, especially when they settle in areas with 2 weak informal labor markets, and the lack of opportunity is either While there is a long-standing and rich literature in economics concerned with the effects of immigration on labor markets in developed countries (Bor- caused by or perceived as discrimination (Guerrero-Ble et al., 2020). jas, 1983; Card, 2001), much less work has looked at the impact of (forced) We then turn to examine the impact of immigration (as mea- migration in developing countries. For a general review of the literature of sured by changes in the number of Venezuelans as a share of the the impact of forced migration on host communities, see Verme and Schuettler local population) on labor market outcomes and locals’ perceptions (2021). on the current situation. We rely on administrative data to measure 3 For Colombia, existing studies have mostly identified negative (Bahar the number of Venezuelans newly registered in each district in Peru et al., 2021; Delgado-Prieto, 2021; Lebow, 2020; Lebow et al., 2021) or on a monthly basis between January 2015 and December 2020. We null effects (Santamaria, 2022) on labor market outcomes of native workers. aggregate this information at the labor market level and rely on a time- For Ecuador, Olivieri et al. (2020) do not find any effects on natives’ labor varying measure of the presence of Venezuelans in each labor market, market outcomes on average, but identify a deterioration of employment quality and earnings among young and low-educated natives in high im- which allows us to use repeated cross-sectional data on outcomes for migration regions. For Peru, Boruchowicz et al. (2021) find null effects, Peruvians and control for location and time fixed effects, as well as, whereas (Morales & Pierola, 2020) find small positive effects on formal location-specific time trends. Hence, we identify the impact of the employment for high-skilled and negative effects on employment and monthly presence of Venezuelans by examining how outcomes for Peruvians earnings for secondary educated natives and those with informal jobs. Vera change when more Venezuelans arrive in a labor market, conditional and Jiménez (2022) find evidence of a substitution of formal with informal on the trend in the outcome. employment among natives in Peru in reaction to Venezuelan immigration. 2 A. Groeger et al. World Development 174 (2024) 106437 We also contribute to the literature on the effects of immigra- tion on popular opinion and discrimination. While most of the liter- ature concentrates on developed countries (e.g., Alesina et al., 2022; Hangartner et al., 2019), there is only a small literature on the ef- fects of the Venezuelan exodus on popular opinion in Latin America. For Chile, Ajzenman et al. (2023) find negative effects on natives’ security perceptions, despite null effects on the objective crime rate.4 For Colombia, Chatruc and Rozo (2021) find that economic concerns, despite a lack of objective evidence on negative labor market effects, are another important driver of anti-immigrant sentiment. Addition- ally, Rozo and Vargas (2021) identify strategic electoral misinformation in Colombia as an additional channel. Exploiting rich opinion polls, we contribute to this literature by estimating the causal impact of migration on both attitudes and perceptions of natives and immigrants in the same context. Another important contribution of this study is to the nascent literature using digital trace data for measurement of migration (Böhme et al., 2020; Hausmann et al., 2018; Palotti et al., 2020; Santamaria, 2022). One of the main difficulties in examining the impact of forced Fig. 1. Evolution of Venezuelan immigrant stock in Peru. migration in host countries is typically the lack of data on where mi- Source: Peruvian National Superintendence of Migrations. grants are settling. To solve this issue, we develop a publicly available Google Trends proxy for the concentration of Venezuelan immigrants across Peruvian regions. We then estimate our preferred specification for Venezuelans to enter the country and implemented a temporary using this proxy – instead of the administrative data from Peruvian residence permit (ironically called Permiso Temporal de Permanencia, authorities – and compare the results obtained. We find that the results henceforth PTP). This permit allowed immigrants to legally work and from the two approaches are surprisingly similar, both in qualitative study in the country, pay taxes, and open a bank account. According and quantitative terms. We believe that our approach can be directly to the national statistical institute (INEI), 50.2% of Venezuelan immi- applied to measure the local presence of Venezuelan immigrants in grants applied for the PTP and were waiting for the decision, while other major host economies. Furthermore, the proposed method can 26.7% reported having obtained it before the ENPOVE survey interview be adapted flexibly to help measure other immigrant concentrations in in February 2018 (Instituto Nacional de Estadística e Informática, any country by varying the choice of keywords adequately. Our study 2019). Given the fact that PTP applicants were legally allowed to stay can therefore help ease data limitations affecting immigration studies in Peru and that most applications in 2018 were successful up to that in general. point, the large majority of Venezuelan immigrants had a legal status The paper proceeds as follows. In Section 2, we describe the context in Peru and were able to work in the informal or formal sector. and institutional background. Section 3 describes the data we use in Unlike in other episodes of crisis migration, such as that of Syrian our analysis as well as our empirical model and identification strategy. refugees during the recent civil war or Central American immigrants in We then present the results in Section 4, and finally we discuss policy the US, Venezuelan immigrants are not only very similar to Peruvians implications and conclude in Section 5. in cultural terms, but are, on average, also more skilled than Peruvians. As of December 2018, 47.8% of Peruvians had less than secondary 2. Background education which was true of only 17.2% of Venezuelan immigrants (see Table 1). However, there is anecdotal evidence that Peruvians Venezuela is currently experiencing the biggest crisis in recent view Venezuelans as contributing little to the economy and that their history. A deep economic, political and humanitarian crisis started presence in the country has increased criminal activities (Janetsky, ramping up with the fall in oil prices and the death of former president 2019). Furthermore, there is some evidence that this has started to lead Hugo Chavez in 2013 (Chaves-González & Echevarría Estrada, 2020). to political backlash (Winter, 2020). This has led to what some authors have called the great Venezuelan Before the pandemic, the Peruvian economy was averaging around exodus (Hausmann et al., 2018; Rozo & Vargas, 2021). In mid-2016, a 5% annual growth rate, which made it an attractive destination for large waves of migrants started to leave the country, by 2019, the main migrants. Moreover, the labor market is highly informal (and therefore destination of migrants were Colombia (1’700,000), Peru (870,000), flexible): in 2018, only 21% of Peruvians held a formal job. Boruchow- Ecuador (385,000), and Chile (371,000) (data reported in Boruchowicz icz et al. (2021) show that the Venezuelan exodus had negligible effects et al. (2021) up to June 2019). According to recent estimates, there on the Peruvian labor market, and argue that this is precisely due to are a total of 7.3 million Venezuelan immigrants worldwide, and the the flexibility associated with the high levels of informality in the labor number of Venezuelans living in Peru has increased from 6615 in 2016 market.5 to more than 870,000 by June 2019 (see Fig. 1), and went up to Very little is known about the actual discrimination affecting over 1.5 million by 2023 (R4V, 2023). This wave of immigration has Venezuelan immigrants in the country. Still, it is plausible that part of increased Peru’s population by over 4 percent. the discrimination reported by immigrants is related to the way they are Traveling from Venezuela to Peru entails a journey of over 4500 portrayed in the media. Freier et al. (2021) provides a detailed analysis kilometers, and before 2017 Peruvian authorities required all immi- of how the Peruvian written media has referred to Venezuelan immi- grants to be in possession of a passport (without any visa requirements). grants. They show that 46% of articles refer to Venezuelan immigrants However, obtaining a passport in Venezuela at the time was difficult, in a neutral fashion, while 28% (26%) have a negative (positive) tone. as processing times were extremely long and required high fees. In light of this situation, in 2017, the Peruvian government made it easier 5 There is some contrasting evidence that the increase in Venezuelan immigrants in Peru led to small decreases in employment rates and earn- 4 On the effects of immigration on crime, see also: Bell et al. (2013) ings of low-skilled (and especially female) Peruvian workers in the informal and Bianchi et al. (2012). sector (Asencios & Castellares, 2020; Morales & Pierola, 2020). 3 A. Groeger et al. World Development 174 (2024) 106437 Table 1 Descriptive statistics. ENPOVE ENAHO ENAHO LAPOP Gallup Dec 2018 Dec 2018 2007–2020 2010–2019 2013–2020 Mean SD Mean SD Mean SD Mean SD Mean SD Community characteristics: Informal employment rate (2017) 0.312 0.064 District population (2017) 298,000 242,000 Share Venezuelan immigrants 0.014 0.011 0.004 0.009 0.003 0.009 0.006 0.120 Individual characteristics: Female 0.469 0.499 0.527 0.499 0.524 0.499 0.510 0.500 0.574 0.495 Age 30.8 9.7 42.4 13.0 40.9 13.0 36.6 12.9 40.1 17.4 Months in Peru 8.19 6.90 Education: Less than secondary 0.172 0.382 0.478 0.499 0.474 0.499 0.250 0.499 0.179 0.384 Education: Complete secondary 0.256 0.437 0.265 0.441 0.247 0.432 0.337 0.473 0.697 0.459 Education: Technical 0.186 0.389 0.123 0.328 0.132 0.339 0.085 0.279 Education: University 0.385 0.487 0.134 0.341 0.146 0.353 0.328 0.470 0.123 0.329 Marital status: Married/Cohabitation 0.576 0.494 0.626 0.484 0.627 0.484 0.592 0.492 0.499 0.500 Marital status: Formerly married 0.042 0.202 0.199 0.399 0.176 0.381 0.074 0.262 0.113 0.316 Marital status: Never married 0.382 0.486 0.175 0.380 0.197 0.398 0.334 0.472 0.386 0.487 Formal employment 0.080 0.271 0.214 0.410 0.205 0.404 Labor income 941 633 1482 1346 1265 1306 Occupation Not working 0.133 0.340 0.161 0.368 0.200 0.400 0.413 0.400 0.349 0.477 Military/Police 0.000 0.000 0.004 0.060 0.005 0.073 Managers 0.000 0.016 0.004 0.060 0.005 0.068 Professionals 0.017 0.127 0.058 0.233 0.058 0.234 Technicians and Ass professionals 0.061 0.239 0.046 0.209 0.043 0.204 Clerical support workers 0.048 0.214 0.037 0.189 0.036 0.187 Services and Sales workers 0.266 0.442 0.139 0.346 0.120 0.325 Skilled agricultural and fishery 0.001 0.032 0.162 0.368 0.169 0.375 Craft and Related trades workers 0.094 0.292 0.052 0.222 0.055 0.227 Operators, Assemblers, Construction 0.068 0.252 0.072 0.259 0.064 0.246 Elementary occupations 0.312 0.463 0.266 0.442 0.245 0.430 HH characteristics: Low socioeconomic status 0.098 0.297 Medium socioeconomic status 0.446 0.497 High socioeconomic status 0.456 0.498 Household size 3.28 1.90 3.81 1.86 4.03 1.95 4.15 2.15 3.95 2.04 Number of people who share bedroom 2.46 0.89 Individuals 7,869 2,201 336,109 8,049 8,005 Descriptive statistics are presented from four surveys used in the paper, ENPOVE, ENAHO, LAPOP and Gallup. More details are available in the paper. Still, a high proportion of articles (44%) mention a problem associated to counties in the US.6 According to ENPOVE, 70% of Venezuelans work with immigrants, with the most prominent ones being crime (26%), the in the same district in which they live.7 contribution to unemployment (7%), and their effects on wages (4%). Encuesta Nacional de Hogares (ENAHO) is the Peruvian version of the Living Standards Measurement Survey, e.g. a nationally representative 3. Research design and data household survey collected monthly on a continuous basis. For our analysis, we use data from January 2007 to December 2020. The 3.1. Data survey covers a wide variety of topics, including basic demographics, educational background, labor market conditions, crime victimization, Our empirical analysis relies on an innovative combination of dif- and a module on respondent’s perceptions about the main problems in ferent data sources ranging from the Peruvian census, immigrant and the country and trust on different local and national level institutions. labor force surveys, opinion polls, and digital trace data: Observations are also spatially identified at the district level, but here Encuesta Dirigida a la Población Venezolana que Reside en El País (EN- we focus on variation in the Venezuelan share of the population at the POVE) is a specialized survey of Venezuelans living in Peru conducted province level, of which there are 198, as these are best representative by the National Institute of Statistics (INEI) in December 2018. The of local labor markets for Peruvians. sample covers five main urban areas in the country where Venezuelan Latin American Public Opinion Project (LAPOP) is a opinion survey con- immigrants were most likely to be present. The survey collects data ducted bi-annually in all countries in Latin America and designed to be on the immigrant’s origin, migration date, and details on their current representative of urban populations. This was fielded in Peru in 2010, employment. Importantly, a full module asks about the immigrant’s experiences with locals, which includes questions about discrimination and hostile attitudes towards them. The respondent’s current location is 6 Overall, there are 1857 districts in the country, which are grouped in 198 identified down to the centro poblado level, which roughly corresponds provinces. to an urban neighborhood or a rural town. 48% of sample resides in 7 ENPOVE does not cover enough provinces to examine cross-sectional Lima. We focus on variation in labor market opportunities at the district variation at this geographical aggregation, as we do for our analysis of the level. Districts are the smallest administrative areas in Peru and are akin impacts on Peruvians. 4 A. Groeger et al. World Development 174 (2024) 106437 2012, 2014, 2017 and 2019 and consists of about 2000 observations distribution of Venezuelan immigration in Peru across regions and from mostly urban areas. The survey questions are centered around time. We follow Santamaria (2022) in calculating a relative measure politics, governance and opinions on current events. Observations are of Venezuelan immigrant concentration by region and year in Peru. also spatially identified at the district level, and again we focus on We then use this measure in our preferred specification, replacing the variation in the Venezuelan share of the population at the province administrative data on the location of Venezuelans to estimate the level, the relevant labor market for Peruvians. impact of Venezuelan immigration on Peruvian labor market outcomes. Gallup World Poll (GWP) is a nationally representative opinion survey 3.2. Outcome variables and has been conducted annually since 2006 in a wide range of countries around the world. The sample collected in Peru is a repeated In the first part of our analysis, we examine the impact of local cross-section of about approximately 1000 observations each year. For labor market conditions on self-reported information on experiencing our analysis, we use data from 2013 to 2020. The survey questions discrimination as reported by Venezuelans surveyed in ENPOVE. Over- are centered around politics, governance, and opinions on current all, 36.4% of Venezuelans report having experienced discrimination, events. We make use of several opinion indices provided by Gallup, with this being slightly more common among women (38.1%) than which measure individual opinions on various domains. Observations men (35.0%). Fig. 2 shows the distribution of reported discrimination are spatially identified at the region level for Peru, which is our level in different districts in Peru. There is clearly variation both across of analysis in this case (there are 25 regions in Peru). and within regions. Report discrimination is least common in Tumbes PTP We measure the location of Venezuelan immigrants on a monthly (23.4%), which is the typical entry point to Peru for Venezuelans and basis from January 2015 to December 2020 using administrative data currently hosts 5% of ENPOVE sample, while Cusco and Lima, where on the district Venezuelan immigrants register at with the Peruvian au- 7% and 48% of Venezuelans are located, show the highest (47.8%) thorities to obtain access to social services. There are strong incentives and median levels (37.1%) of reported discrimination, respectively. to register as this is also a prerequisite for applying to obtain the PTP. Individuals who experienced discrimination are then asked in which lo- This data only records monthly gross arrivals so we do not know the cations did the episode took place. Among all Venezuelans surveyed in outflows of Venezuelans to other locations within Peru or out of the ENPOVE, including those not reporting being discriminated against, the country. In ENPOVE, 84% of Venezuelan immigrants in Peru report three most common locations are, at work (20.0%), on the streets/in having lived in the same district during their entire time since arriving public places (25.0%), and on public transit (9.8%). in the country. The data shows the arrival of 511,223 Venezuelans as In the second part of our analysis, we examine the impact of of December 2020, which, while somewhat lower than estimates of the Venezuelans on a wide variety of outcomes for Peruvians. First, we ex- actual number of Venezuelans living in Peru, is quite substantial. amine the impact on labor market outcomes, specifically employment, We also use data from the National Census 2007 and 2017. We use formal employment, log wages if employed, log household income, and the 2017 Census data to measure the share of workers in the formal log household expenditure. Second, we examine the impact on reported and informal sector in each district as well as the total local population crime and opinions about personal safety. Specifically, we look at the in each district, province and region. We use the 2007 data to construct reported (log) number of crimes in each district from administrative both of our instruments (discussed in more detail below) as well as to data split into non-violent and violent crimes (data starting in 2011, create additional controls for the local economic environment. More means 3.54 for log violent crime and 3.31 for log non-violent crime), precisely, in the first part of our analysis, we use information on the from ENAHO whether crime is a major national problem (12.7%), from industrial distribution (using detailed four-digit codes) in each district, LAPOP whether they have been a crime victim in the last two months while in the second part, we use information on the total number of (32.0%), and standardized variables from LAPOP on opinions about Venezuelans in each province in Peru. neighborhood safety and from Gallup on personal security. Lastly, we To construct the Trade shock instrument for the first part of our examine the impact on community outcomes. Specifically, we look at analysis, we also use trade data from the reports of TradeMap. From standardized indices measuring the quality of local services and trust in this website, we are able to identify export and import values for Peru neighbors from LAPOP and indices from Gallup on community attach- on a monthly basis since 2006 at the HS 6-digit product revision. In ment, the quality of the local community, and whether the community addition, correspondence tables of HS 6-digit product revision to ISIC likes diversity. 3.1 revision (United Nations) are used to harmonize products with their corresponding industry sector in order to be matched with census 3.3. Control variables data. This allows us to create a year-ISIC panel with information about Table 1 shows the descriptive statistics for the control variables exports and imports for 86 industry sectors in Peru. used in each analysis. The information we have available from each We also create a measure of Venezuelan immigrant concentration dataset varies, but we can always control for age, gender, education, using Google Trends in different regions of Peru in each year to be used marital status, whether employed, and household size. ENPOVE collects as a robustness check. In the face of severe data limitations on immi- additional relevant data about Venezuelans including how long they gration in many countries, Google trends has recently been proposed have been in Peru, whether they work in the formal sector, their as a tool for the measurement and prediction of migration (Böhme labor income, their occupation, and the socioeconomic status of their et al., 2020). We select keywords that Venezuelan immigrants in Peru household. ENAHO collects very similar data from Peruvians. Neither search for through the Google search engine to proxy for immigrant LAPOP nor Gallup collect detailed data on employment and occupation. stocks at the regional level.8 We expect these terms to be frequently We now describe our main explanatory variables. consulted by all Venezuelan immigrants abroad (and not by Peruvians) In the first analysis, the main explanatory variable is the informal and, hence, their relative search frequencies to be indicative of the employment rate measured in the 2017 census in the district in which Venezuelans reside, which has a mean of 31.2%. This is noticeably 8 lower than the overall informal employment rate of 59.9% among Particularly, we extract Google Trends at the region-year level for the combination of the following acronyms/keywords: ‘‘PTP’’ (permiso temporal Peruvians surveyed in ENAHO, indicating that Venezuelans are gen- de permanencia - work permit for immigrants in Peru), ‘‘SAIME’’ (Servicio erally settling in areas in Peru with less formal unemployment. Only Administrativo de Identificación, Migración 𝑦 Extranjería - Venezuelan agency for 8.0% of Venezuelan immigrants surveyed in ENPOVE are employed in civil registry services including passport issuance for migrants abroad), and ‘‘La the formal sector (i.e., they have an employment contract with social Patilla’’ (Venezuelan news agency). security benefits), hence the employment rate in the informal sector 5 A. Groeger et al. World Development 174 (2024) 106437 Fig. 2. Spatial Variation in Reported Discrimination in ENPOVE. Source: Own calculations ENPOVE. among Peruvians in a particular location is a good measure of the than Peruvians: only 17.2% had less than secondary education and availability of job opportunities for Venezuelans and the competition 38.8% had a university education, compared to 47.8% and 13.4% with Peruvians for these jobs. We hypothesize that locations with only, respectively, among Peruvians. Despite the differences in human higher informal sector employment rates have more opportunities and capital, immigrants had worse labor market outcomes: 13% were less competition with Peruvians for jobs. For this reason, we sometimes unemployed, 8% had a formal job and the average income was of S/ describe locations with high informal employment rates as having 941. On the other hand, Peruvians had a slightly higher unemployment ‘strong’ informal labor markets. rate (16.1%), but were almost three times as likely to have a formal In the second analysis, our main explanatory variable is the number employment (21.4%) and earned 50% more than immigrants (S/1482). of Venezuelan immigrants in a particular month and province (as Despite being more educated, Venezuelans work in less skilled jobs than measured in administrative data) as a share of the total local population Peruvians, especially in sales and services and elementary occupations. measured in the 2017 census.9 Over the full sample period of our The big exception is agriculture and fishing which is the occupation for analysis, the mean share of Venezuelans in the population is very low, 16.2% of Peruvians, and where we see almost no Venezuelans. 0.4% in the ENAHO sample, 0.3% in the LAPOP sample, and 0.6% in 3.4. Empirical model and identification the LAPOP sample. However, if we just look at ENAHO in December 2018, we see that the share has risen to 1.4%. We first examine the impact of local labor market conditions on The remainder of Table 1 shows the means and standard deviation immigrants’ reports of experiencing discrimination. More specifically, for the control variables for Venezuelan immigrants in December 2018, we estimate the following regression model: as captured in the ENPOVE (Columns 1 and 2), and for the average Peruvian respondents in ENAHO in two periods: December 2018 and 𝑦𝑖𝑗 = 𝛼 + 𝛽1 𝑙𝑛𝐸𝑚𝑝𝑗 + 𝛿𝑋𝑖𝑗 + 𝜃𝑍𝑗 + 𝛼𝑜 + 𝜀𝑖𝑗 (1) 2007–2020 (Columns 3 and 4, and 5 and 6, respectively). Additionally, where 𝑦𝑖𝑗 equals one if individual 𝑖 in district 𝑗 reports having expe- we also provide descriptive data for the LAPOP and Gallup opinion rienced discrimination in the 2018 in the ENPOVE (in general, or in surveys. a particular location) and zero otherwise. 𝑙𝑛𝐸𝑚𝑝𝑗 is the log informal Venezuelan immigrants were slightly less likely to be female (46.9% employment rate in the same district measured in the 2017 census. We vs. 52.7%) and are younger than their local counterparts (31 vs. control for a variety of individual (𝑋) and district (𝑍) level controls.10 42 years old). As mentioned above, Venezuelans are more educated 10 Individual level controls in the regression include gender, age, education, 9 In our regressions, we take the log of share variable. In order to include marital status, months living in Peru, household socioeconomic strata, house- provinces with no Venezuelans prior to 2015, we add 1 to both the number of hold size, and number of people sharing one’s bedroom. Employment and Venezuelans and the total population of each province. The median province occupation controls include total income, whether in formal employment, and has 55,000 inhabitants and the smallest has nearly 3000, hence this transfor- occupation including not working. District-level controls include log popula- mation should be immaterial. As the Venezuelan share of the population is tion in 2017, the log number of Venezuelans (+1) in 2007, log mean household very low in most provinces but highly skewed, it is important to measure this expenditure in 2013, log agricultural rate in 2007, log manufacturing rate in variable in logs. 2007, and log travel distance to Lima. 6 A. Groeger et al. World Development 174 (2024) 106437 We also include origin municipality (in Venezuela) fixed effects (𝛼𝑜 ) to Table 2 Impact of local labor market conditions on reported discrimination by Venezuelans. control for any origin-specific factors that could affect perceptions of discrimination (e.g. skin color, accent). 𝜀𝑖𝑗 is an error term clustered OLS IV at the district level, as this is the level of aggregation of our main Overall: Have felt discriminated − Mean outcome = 0.364 explanatory variable. Log local informal Emp rate 0.003 −0.002 −0.030 −0.660* Among our district-level controls (𝑍𝑗 ), we include the (log) number (0.095) (0.094) (0.085) (0.360) of Venezuelans (+1) who lived in district 𝑗 in 2007 (as identified in the F-stat weak identification 693 census).11 Clearly, the number of immigrants in a certain location is R-squared 0.023 0.032 0.071 Observations 7869 7869 7869 7869 an important determinant of discrimination, but including the current Men: Have felt discriminated − Mean outcome = 0.350 number of immigrants in the regression would introduce additional endogeneity problems. Previous literature has shown that immigrants Log local informal Emp rate 0.059 0.059 0.044 −0.704** (0.109) (0.108) (0.098) (0.345) are more likely to move to locations where they have a network of peers from the same country. We show below that this is true among F-stat weak identification 318 R-squared 0.022 0.027 0.093 Venezuelans in Peru as well. Observations 4176 4176 4176 4176 Our main interest is on 𝛽1 , which represents the impact of the labor Women: Have felt discriminated − Mean outcome = 0.381 market conditions in district 𝑗 on the discrimination experienced by Log local informal Emp rate −0.060 −0.077 −0.120 −0.568 Venezuelans. Venezuelans who arrive to the country clearly evaluate (0.108) (0.106) (0.104) (0.403) where to settle based on the labor market opportunities (among other F-stat weak identification 370 reasons), and therefore to causally identify 𝛽1 we need a source of R-squared 0.027 0.042 0.101 exogenous variation for the labor market at the local level. We use an Observations 3693 3693 3693 3693 instrumental variable strategy that exploits variation in the share of Sociodemographic characteristics Yes Yes Yes Yes workers employed in different industries in 2007, along with national Employment and Occupation No Yes Yes Yes level shocks to trade in specific industries between Oct 2016 and Oct Origin municipality FE No No Yes Yes 2017, when the census was collected. More precisely, the first stage *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at district regression is given by: level in parentheses. Local informal employment rate is measured in the 2017 census. The predicted export shock in each district in year prior to Oct 2017 is used 𝑙𝑛𝐸𝑚𝑝𝑗 = 𝛼 + 𝜈𝐸𝑥𝑝𝑜𝑟𝑡𝑠ℎ𝑜𝑐𝑘𝑗 + 𝜂𝑋𝑖𝑗 + 𝜈𝑍𝑗 + 𝛼𝑜 + 𝜖𝑗 (2) to instrument for the informal employment rate. Sociodemographic controls include gender, age, education, marital status, months living in Peru, household socioeconomic where 𝐸𝑥𝑝𝑜𝑟𝑡𝑠ℎ𝑜𝑐𝑘𝑗 is the shift-share instrument calculated by mul- strata, household size and number of people sharing one’s bedroom. Employment tiplying the share of workers in district 𝑗 employed in industry 𝑘 in and occupation controls include total income, whether in formal employment, and 2007 with the log change in national level exports in industry 𝑘 be- occupation including not working. All regression also control for the following variables measured at the district level: log population in 2017, the log number of Venezuelans tween 2016 and 2017, aggregating over each industry within districts.12 in 2007, log mean household expenditure in 2013, log agricultural rate in 2007, log The remaining control variables are similar to those in Eq. (1). The manufacturing rate in 2007 and log travel distance to Lima. identifying assumption in this instrumental variables regression is that the change in trade in specific sectors at the national level affects the local labor market conditions without directly having effects on 𝛽 identifies the effect of the number of Venezuelan immigrants in the discrimination and hostilities reported by immigrants in a specific year 𝑡 in province 𝑝. Importantly, we also control in all models for time location. Importantly, we also control for other local level economic (either year or month*year) fixed effect (𝛼𝑡 ), and province fixed effects characteristics, such as the importance of agriculture and manufactur- (𝛼𝑝 ). Hence, we control for any time-invariant differences in outcomes ing, which could be related to both exposure to export shocks and across provinces and aggregate changes in outcomes, both of which experiencing discrimination. may be related to the location choice decisions of Venezuelans. In We then turn to examine the impact of receiving a larger population our preferred specification, we also control for province-specific time- of Venezuelan immigrants on natives’ labor market outcomes and trends (𝑡𝑖𝑚𝑒 ∗ 𝛼𝑝 ) which account for any local trends in the outcome different dimensions of locals’ perceptions. To do this, we estimate the variable. In this model, the impact of the presence of Venezuelans following regression: is identified by examining how outcomes for Peruvians change when 𝑦𝑖𝑝𝑡 = 𝛼 + 𝛽𝑙𝑛(𝐼𝑚𝑚𝑖𝑔𝑟𝑎𝑛𝑡𝑆ℎ𝑎𝑟𝑒)𝑝𝑡 + 𝛿𝑋𝑖𝑝𝑡 + 𝛼𝑡 + 𝛼𝑝 + 𝑡𝑖𝑚𝑒 ∗ 𝛼𝑝 + 𝜀𝑖𝑝𝑡 (3) more Venezuelans arrive in an area conditional on the trend in that outcome.13 where 𝑦𝑖𝑝𝑡 represent a particular outcome for individual 𝑖 living in It is possible that local shocks impact both the destination choice province 𝑝 interviewed at time 𝑡, 𝑙𝑛(𝐼𝑚𝑚𝑖𝑔𝑟𝑎𝑛𝑡𝑆ℎ𝑎𝑟𝑒)𝑝𝑡 is the (log) of the of Venezuelans and outcomes for Peruvians, hence we also use an number of Venezuelan immigrants in province 𝑝 at time 𝑡 as a share of instrumental variable strategy where we exploit the intuition that the total population of province 𝑝 in December 2017, and 𝑋𝑖𝑝𝑡 include immigrants are more likely to move to localities where immigrants a series of individual level controls, including age, education, marital from the same nationality are located. We therefore instrument our status, and household size for all models, and employment status and measure of the number of Venezuelans in a province 𝑝 with the pres- occupation for non-labor market outcomes measured in ENAHO. 𝜀𝑖𝑝𝑡 is ence of Venezuelans in that province as recorded in the 2007 census an error term clustered at the province level, as we measure the number interacted with year dummy variables. This is a semi-parametric ver- of Venezuelan immigrants at this level and suspect there is strong serial sion of the traditional immigrant network instrument as recommended correlation in many of our outcomes. by Goldsmith-Pinkham et al. (2020) as it allows the strength of the network effect to potentially vary in each year. An overidentification 11 test can be used to examine whether the instrument has a consistent Our results are qualitatively similar if we instead control for the number relationship over time. of Venezuelans living in each district in 2007 in levels. 12 To be more precise, this shift-share instrument is calculated as follows: Our instrument will be valid as long as the location of Venezuelans ∑𝑁 in Peru in 2007 does not impact outcomes for Peruvians nearly ten 𝑘=1 (𝑆ℎ𝑎𝑟𝑒𝑗𝑘(2007) ×𝛥𝐸𝑥𝑝𝑜𝑟𝑡𝑘 ). We first multiply the share of workers employed in a particular industry in each district in the baseline year 2007 (the ‘‘shares’’) by the national change in exports in that industry in the year prior to Oct 13 2017 (the ‘‘shifters’’). We then sum this up over all industries in each district Our results are robust to controlling for district fixed effects and to create a measure of the predicted export shock in each district. time-trends. 7 A. Groeger et al. World Development 174 (2024) 106437 Fig. 3. Spatial Variation in Informal Employment in 2017 in ENPOVE. Source: Own calculations ENPOVE. years later, except via its impact on the location choice of Venezuelans predicted local exports has a positive relationship with formal employ- after 2015. One worry is that Venezuelans now may be attracted to ment rates. Consequently, higher predicted exports imply that a lower places for similar reasons as Venezuelans in 2007. However, being able share of people work in the informal sector, where most Venezuelan to control for province level fixed effects as well as long-run provincial immigrants are employed. The full results of the first stage relationship trends should alleviate this concern as our IV strategy still focuses on between export shocks and informal employment rates are provided the relationship between increased local inflows of Venezuelans over in Table A.1. Using a linear specification for the first stage yields a time and changes in labor market outcomes for Peruvians in the same very strong instrument, with an F-stat for the excluded instrument that locations. ranges between 318 and 693, even while controlling for a number of other measures of the local economic environment. 4. Results Column (4) in Table 2 shows the second stage results from our IV strategy. The first thing to note is that the IV coefficient is much 4.1. Labor market conditions and discrimination larger than the OLS one. This difference indicates that Venezuelan immigrants are selecting themselves into labor markets where there is Table 2 shows our main results on the effects of local labor mar- more discrimination. This is consistent with the idea that immigrants ket conditions on self reported discrimination. We first present the are willing to deal with more discrimination as long as the labor market OLS results, and then turn to comment on the estimates from our IV offers better opportunities and higher wages. The selection seems more specification. Importantly, given that the types of jobs in which men relevant for men than for women. and women work differ, we show the main results for the full sample Higher employment rates in the informal sector cause a reduction of immigrants who responded to the survey and split the sample by in the level of discrimination reported by Venezuelan immigrants. On gender. average, a 10 percent increase in informal employment in a district Columns (1)–(3) show the OLS relationship between the (log) local causes a 6.6% reduction in discrimination. Furthermore, the results informal employment rate and the reports of discrimination. In the show that men are more likely to suffer from discrimination due to three panels, this relationship shows small and insignificant coeffi- changes in the informal employment rate: a 10% increase in employ- cients. As discussed above, these OLS results cannot be interpreted ment reduces discrimination against men by 7%, while for women, the as causal due to an endogeneity issue that arises from the fact that point estimate indicates a decrease of 5.7% which, however, is not immigrants make their location decisions based on the local labor statistically significant. market conditions. To overcome this problem, we use an instrumental Importantly, the reduction in discrimination as a response is not variable strategy in which we exploit exogenous variation in the impact explained by having more exposure in the labor market: as we show of national level export shocks on local (informal) employment rates in Table A.2, variation in local informal employment is unrelated to depending on detailed measures of the local industry composition. the Venezuelan immigrants’ probability of being employed. While this Spatial variation in both the informal employment rate in 2017 and may be a bit surprising, we have to take into account that 94% of the instrument are shown in Figs. 3 and 4, respectively. Importantly, Venezuelan immigrants are employed, so there is little margin for there is clear variation in both dimensions, across and within regions. improvement. Additionally, for men, we observe a negative effect on The first stage relationship is shown graphically in Fig. 5. An increase in wages with the point estimate indicating a reduction of 9.5% for a 10% 8 A. Groeger et al. World Development 174 (2024) 106437 Fig. 4. Spatial Variation in 2016–2017 Log Export Shock in ENPOVE. The instrument allocates national level changes in exports at the industry level to different locations based on local industry structure in 2007. Fig. 5. First stage: Local trade shocks and employment. increase in the informal employment rate. This may be indicative of socioeconomic status. It is also higher for individuals in lower-skilled strong competition in tight informal labor markets. We do not observe occupations, in particular for women. This is consistent with reported any wage effect for women. discrimination reflecting a lack of progress in the labor market for The fact that discrimination against men shows a stronger response richer and more educated Venezuelans. Whether report discrimination to labor market conditions is potentially related to the types of interac- reflects being disappointed or actually being discriminated against is tions immigrants have with locals. In Table 3, we present the full results difficult to quantify. from the IV specification. For both men and women, reported discrim- To explore further the mechanisms underlying these effects, in ination increases with time spent in Peru, education, and household Table 4 we exploit the fact that ENPOVE collects detailed information 9 A. Groeger et al. World Development 174 (2024) 106437 Table 3 Regression correlates of reported discrimination by Venezuelans. Men Women Age −0.001 (0.001) −0.002*** (0.001) Log months in Peru 0.047*** (0.013) 0.081*** (0.013) Education: Complete secondary 0.011 (0.023) 0.035 (0.028) Education: Technical 0.059*** (0.023) 0.031 (0.030) Education: University 0.074*** (0.024) 0.058** (0.028) Married/Cohabitation 0.024 (0.017) 0.021 (0.020) Formal employment −0.017 (0.025) 0.001 (0.036) Labor income (Thousands) −0.005 (0.014) −0.011 (0.021) Managers −0.346** (0.152) −0.348*** (0.066) Professionals 0.042 (0.088) 0.035 (0.055) Technicians and Ass professionals −0.028 (0.051) −0.001 (0.038) Clerical support workers −0.020 (0.054) 0.067* (0.039) Services and Sales workers 0.006 (0.039) 0.116*** (0.023) Skilled agricultural and fishery 0.038 (0.042) Craft and Related trades workers −0.017 (0.043) 0.135*** (0.050) Operators, Assemblers, Construction 0.008 (0.041) 0.214* (0.111) Elementary occupations 0.060 (0.038) 0.158*** (0.029) Medium socioeconomic status 0.112*** (0.036) 0.087** (0.041) High socioeconomic status 0.064 (0.039) 0.069* (0.041) Household size −0.007 (0.006) −0.009* (0.005) Number of people who share bedroom 0.013 (0.014) 0.004 (0.009) Log local informal employment rate in 2017 −0.704** (0.345) −0.568 (0.403) Log local population in 2019 0.000 (0.027) 0.031 (0.031) Log local Venezuelans in 2007 −0.027 (0.023) −0.048* (0.026) Log local household expenditure PC 2013 −0.327 (0.230) −0.251 (0.262) Log proportion in agriculture in 2007 −0.020 (0.039) −0.028 (0.031) Log proportion in manufacturing in 2007 0.218** (0.095) 0.177* (0.094) Log travel duration to Lima 0.037* (0.019) 0.028 (0.020) Mean dep. var 0.350 0.381 Observations 4176 3693 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at district level in parentheses. Local informal employment rate is measured in the 2017 census. The predicted export shock in each district in year prior to Oct 2017 is used to instrument for the informal employment rate. The default category for the occupation variables is not working. All regressions also control for origin municipality in Venezuela fixed effects. on where discrimination episodes took place. We show the OLS and IV 4.2. Immigration and local’s labor market outcomes results for our preferred specification, the one that includes all controls and fixed effects. Discrimination at work seems to respond the least to In the previous section, we established that labor market conditions local employment, with a coefficient that implies that a 10% increase have a causal effect on the way Venezuelan immigrants perceive to be in informal employment leads discrimination to decrease by 2.8%, treated by locals: lower unemployment in the informal labor market although the relationship is not statistically significant. Interestingly, leads to a decrease in discrimination. We now turn to study the flip-side there is a clear gender split on whether discrimination occurs in streets of this question, namely, the way in which the presence of Venezuelans and public spaces. A 10% increase in informal employment causes a affect Peruvians’ labor market outcomes and their perceptions about decrease in discrimination against men in streets and public spaces of crime, corruption, and public good provision at the local level. To about 10%, with no significant change in discrimination against women conduct this analysis we estimate Eq. (3). in these spaces. Finally, discrimination in public transit responds sim- Table 5 shows the results on the impact of the presence of Venezue- ilar regardless of the gender, with reductions of about 4.5%–5% in lan immigrants on Peruvian’s labor market outcomes. We report our discrimination for a 10% increase in the informal employment rate. OLS estimates with different sets of controls (Panels A and B). We These results are consistent with a situation in which weak local la- then report our aggregate IV estimates (Panel C), along those from bor markets create general resentment towards Venezuelan immigrants, a subgroup specification by gender (Panels D and E, respectively). A which leads to discrimination by people who do not share a work- higher number of Venezuelan immigrants in a given province corre- place with Venezuelans. There are many reasons why this could then lates with higher levels of employment (but not formal employment) lead to more perceived discrimination ‘on the streets’ and in ‘public for Peruvians once we include province and time fixed effects as transit’, rather than ‘at work’. One explanation in line with the inter- well as province-specific trends (Panel B). Additionally, households in group contact theory is that working with immigrants implies repeated provinces with more immigrants report higher incomes and expen- interactions and typically creates a bond that can lead to reductions ditures. As mentioned above, the OLS estimates may suffer from an in natives’ discriminatory attitudes towards immigrants (Steinmayr, endogeneity problem, and the associations observed in Panels A and 2021).14 B could be caused by the fact that immigrants sort into more dynamic labor markets. We introduce our instrumental variable estimates in Panel C of 14 Table 5. Recall that in these regressions we instrument the log share of We also examined whether the results varied depending on how long Venezuelans had been in Peru. We found that the impact of local labor markets Venezuelans at the province-year level with the log share of Venezue- is larger for individuals (in particular men) who arrived more recently in Peru lans in the same province in 2007 interacted with year dummies. The (after February 2018). However, it is difficult to know how to interpret these relationship between our instrument and the endogenous regressor is results because of the potential changing selection of migrants over time, in depicted in Fig. 6, where it is clear that immigrants are more likely to other words separating cohort and time in the country effects. move to locations where there is an established network of compatriots 10 A. Groeger et al. World Development 174 (2024) 106437 Table 4 Impact of local labor market conditions on discrimination in different locations. At work Streets/Public places Public transit OLS IV OLS IV OLS IV Overall Log local informal Emp rate −0.034 −0.275 0.051 −0.749* −0.047 −0.509* (0.073) (0.247) (0.085) (0.383) (0.072) (0.296) Observations 6810 6810 7869 7869 7869 7869 R-squared 0.064 0.061 0.063 0.030 0.076 0.052 Mean dep. var 0.201 0.250 0.098 Men Log local informal Emp rate 0.007 −0.141 0.126 −0.994** −0.017 −0.521* (0.076) (0.251) (0.111) (0.473) (0.077) (0.314) Observations 3923 3923 4176 4176 4176 4176 R-squared 0.085 0.083 0.081 0.016 0.109 0.081 Mean dep. var 0.191 0.233 0.095 Women Log local informal Emp rate −0.118 −0.472 −0.031 −0.452 −0.071 −0.445 (0.112) (0.375) (0.084) (0.333) (0.076) (0.282) Observations 2887 2887 3693 3693 3693 3693 R-squared 0.101 0.094 0.096 0.087 0.103 0.089 Mean dep. var 0.215 0.269 0.100 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at district level in parentheses. Local informal employment rate is measured in the 2017 census. The predicted export shock in each district in year prior to Oct 2017 is used to instrument for the informal employment rate. All regressions control for gender, age, education, marital status, months living in Peru, household socioeconomic strata, household size, number of people sharing one’s bedroom, total income, whether in formal employment, occupation including not working and origin municipality in Venezuela fixed effects and the following variables measured at the district level: log population in 2017, the log number of Venezuelans in 2007, log mean household expenditure in 2013, log agricultural rate in 2007, log manufacturing rate in 2007 and log travel distance to Lima. Table 5 Impact of Venezuelans on the labor market outcomes of Peruvians. Employment Formal employment Log wages if employed Log household income Log household expenditure (a) OLS: Month ∗ Year and Province fixed effects Log Share Venezuelans −0.001 0.003*** −0.002 −0.008*** −0.014*** (0.001) (0.001) (0.003) (0.003) (0.003) R-squared 0.145 0.236 0.434 0.469 0.528 (b) OLS: Month ∗ Year and Province fixed effects and Province time-trends Log Share Venezuelans 0.003** −0.001 0.005 0.014*** 0.013*** (0.001) (0.001) (0.004) (0.004) (0.003) R-squared 0.149 0.237 0.438 0.474 0.534 (c1) IV: Month ∗ Year and Province fixed effects and Province time-trends Log Share Venezuelans 0.006*** −0.000 0.001 0.022*** 0.014** (0.002) (0.002) (0.007) (0.005) (0.006) (c2) Men: IV: Month ∗ Year and Province fixed effects and Province time-trends Log Share Venezuelans 0.006*** 0.003 −0.002 0.017*** 0.010 (0.001) (0.002) (0.010) (0.006) (0.007) (c3) Women: IV: Month ∗ Year and Province fixed effects and Province time-trends Log Share Venezuelans 0.006 −0.003 0.005 0.027*** 0.019*** (0.004) (0.003) (0.007) (0.006) (0.007) Mean outcome 0.801 0.205 6.75 9.93 9.44 Men 0.898 0.245 6.92 9.47 9.97 Women 0.712 0.169 6.50 9.41 9.88 Individuals 337,725 337,725 106,744 337,718 337,680 Men 160,699 160,699 63,833 160,694 160,682 Women 177,006 177,006 42,696 177,004 176,978 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at province level in parentheses. Log Share Venezuelans is relative to the 2017 population of the province. Log Share VZs in the province in 2007 interacted with year fixed effects are used as instruments for Log Share of Venezuelans. All regressions include controls for a quadratic in age, education, marital status, and household size. and that this relationship is stable over time, even though there has Our IV estimates in Panel C tell the same qualitative story as been a large increase in the Venezuelan immigrant share over time. This those in Panel B, yet the point estimates become larger in magnitude. is true even though the number of Venezuelans in Peru in 2007 was A doubling in the share of Venezuelans in a province increases the quite small. The F-stat for the excluded instrument is 2300, showing probability of a Peruvian being employed by 0.6%, increases household the strong relationship in the first-stage robustness of the instrument. income by 2.2%, and expenditures by 1.4%. The effects on income and We also fail to reject that our model is over-identified which is an indication that the shift-share instrument is truly picking up the impact expenditure are nearly twice as large for women as for men. These of increasing the number of Venezuelans who are being pulled to positive impacts on natives’ labor market outcomes are sizeable, given locations where Venezuelans previously settled. the large overall increase in the Venezuelan share of the population. 11 A. Groeger et al. World Development 174 (2024) 106437 Table 6 Robustness check using Google Trends proxy of Venezuelan immigration: Impact of Venezuelans on the labor market outcomes of Peruvians. Employment Formal employment Log wages if employed Log household income Log household expenditure (a) OLS: Month ∗ Year and Province fixed effects Google Trends VZ immigration −0.001 0.004*** 0.007** 0.004 −0.008* (STD) (0.001) (0.001) (0.004) (0.004) (0.005) R-squared 0.145 0.236 0.434 0.469 0.528 (b) OLS: Month ∗ Year and Province fixed effects and Province time-trends Google Trends VZ immigration 0.004*** 0.001 0.010*** 0.017*** 0.008*** (STD) (0.001) (0.001) (0.002) (0.002) (0.003) R-squared 0.149 0.237 0.438 0.474 0.534 (c1) IV: Month ∗ Year and Province fixed effects and Province time-trends Google Trends VZ immigration 0.009*** 0.000 0.005 0.019*** 0.008 (STD) (0.003) (0.002) (0.006) (0.005) (0.006) (c2) Men: IV: Month ∗ Year and Province fixed effects and Province time-trends Google Trends VZ immigration 0.005*** 0.002 0.003 0.013** 0.004 (STD) (0.002) (0.002) (0.007) (0.005) (0.005) (c3) Women: IV: Month ∗ Year and Province fixed effects and Province time-trends Google Trends VZ immigration 0.012** −0.002 0.004 0.026*** 0.013* (STD) (0.005) (0.003) (0.009) (0.006) (0.007) Mean outcome 0.801 0.205 6.75 9.93 9.44 Men 0.898 0.245 6.92 9.47 9.97 Women 0.712 0.169 6.50 9.41 9.88 Individuals 337,725 337,725 106,744 337,718 337,680 Men 160,699 160,699 63,833 160,694 160,682 Women 177,006 177,006 42,696 177,004 176,978 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at province level in parentheses. Share of Venezuelans as proxied by our Google Trends measure (standardized with mean zero and standard deviation one) at the region-year level as discussed in the paper. Log Share VZs in the province in 2007 interacted with year fixed effects are used as instruments for the Google Trends Venezuelan immigration measure. All regressions include controls for a quadratic in age, education, marital status, and household size. To check the robustness of these results, we re-estimate the IV speci- Venezuelans may have generally expanded the economic opportunities fication based on Eq. (3), but using our Google Trends measure instead for Peruvian because of their higher levels of potential productivity, of the administrative data from the Peruvian authorities to proxy for due to higher human capital and concentration in low wage jobs. Venezuelan immigration. Note that in this approach the identifying Furthermore, most of the informal jobs taken by Venezuelans are in the variation comes from the more aggregate level of the Peruvian regions, service sector which potentially could have freed up time, especially as Google Trends is not available at our preferred level of analysis for Peruvian women to be more engaged in the labor market. This may (provinces) in Peru. The results are presented in Table 6. Despite the explain the results for high skilled individuals in particular. differences in the source and construction of the immigration measure, the IV results in Panel C are remarkably similar, both in qualitative and 4.3. Immigration, crime and communities quantitative terms. This suggests that measurement error and under- reporting in the administrative data are not biasing our results. Perhaps One widespread claim mentioned in some media reports is that more importantly, it also demonstrates that our approach is capable Venezuelan migration led to an increase in crime (Freier et al., 2021). of measuring Venezuelan immigration in Peru successfully and likely We test whether this claim is supported by the data in Table 8, where could be used in other contexts to obtain reliable causal estimates of we use administrative information on the number of non-violent and the impact of immigration on natives’ labor market outcomes even in violent crimes reported in each municipality, the personal security the absence of high-quality administrative data. index from Gallup, and reports on whether crime is perceived as a In the last part of our analysis, we shed more light on the potential major problem in ENAHO. The structure of this table is the same as mechanisms behind the positive effects of Venezuelan immigration on the previous one, with Panel C as our preferred specification. Peruvian labor market outcomes. To this end, we conduct a heterogene- ity analysis by natives’ gender and skill level, the results of which are Consistent with the idea that Venezuelan inflow lead to improve- presented in Table 7. Focusing on male labor market outcomes, we find ments in labor market conditions, we observe that locations that re- larger impacts on the employment of medium- and high-skilled men ceived a larger number of immigrants have lower number of reported (with completed secondary or tertiary education, respectively), as well non-violent crimes (column 2). This effect is large with a double of as on income and expenditure. Interestingly, increased employment Venezuelans in a province leading to a 42% decline in reported non- among high-skilled men seems to be driven mainly by increased formal violent crimes. Individuals are also less likely to report that crime is a employment which is not the case for medium-skilled men. major national problem, this is true for both men and women. For women, the positive impacts on income and expenditure are Finally, in Table 9 we examine the effects of immigration on local concentrated among low and high-skilled individuals. For them, the communities. Consistent with our previous findings, Peruvians living results suggest that the effect is driven by increased (informal) em- in areas with a higher share of Venezuelan immigrants report that the ployment. For the low-skilled, wage information is missing for most quality of local services and community quality are higher and that they workers, so increased income and expenditure could reflect increased have greater trust in their neighbors. However, in these locations they wages or hours of work or (as many of these women are not working also report that the community is less likely to value diversity. In gen- full-time) increased earnings of their partner. eral, these findings are stronger for men than for women. It is important The positive impact of Venezuelan immigration on Peruvian labor to note that these findings could be driven by the positive impact that market outcomes has a number of potential explanations. The arrival of Venezuelans have on the labor market outcomes of Peruvians. 12 A. Groeger et al. World Development 174 (2024) 106437 Table 7 Heterogeneity analysis by gender and skill level of natives: Impact of Venezuelans on the labor market outcomes of Peruvians. Employment Formal employment Log wages if employed Log household income Log household expenditure Low skilled men Log Share VZs 0.005 −0.002 −0.015 0.011 0.005 (0.003) (0.004) (0.016) (0.015) (0.015) Mean outcome 0.938 0.078 6.44 9.52 9.01 Observations 66,578 66,578 17,751 66,577 66,563 Medium skilled men Log Share VZs 0.010** 0.001 0.009 0.016** 0.006 (0.004) (0.004) (0.009) (0.006) (0.006) Mean outcome 0.886 0.237 6.83 10.04 9.59 Observations 46,239 46,239 19,777 46,238 46,237 High skilled men Log Share VZs 0.005* 0.009*** −0.009 0.015** 0.010* (0.003) (0.003) (0.012) (0.007) (0.006) Mean outcome 0.854 0.486 7.31 10.54 10.01 Observations 47,894 47,894 26,406 47,891 47,894 Low skilled women Log Share VZs 0.011 −0.000 0.004 0.038*** 0.034** (0.007) (0.003) (0.028) (0.014) (0.017) Mean outcome 0.746 0.057 5.76 9.52 9.02 Observations 93,483 93,483 11,936 93,483 93,456 Medium skilled women Log Share VZs −0.002 −0.007 0.014 0.006 0.009 (0.005) (0.006) (0.011) (0.008) (0.006) Mean outcome 0.640 0.151 6.24 10.03 9.63 Observations 37,341 37,341 9151 37,340 37,340 High skilled women Log Share VZs 0.006 0.000 0.005 0.026*** 0.006 (0.004) (0.005) (0.007) (0.005) (0.006) Mean outcome 0.703 0.412 7.02 10.50 10.01 Observations 45,984 45,984 21,517 45,983 45,984 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at province level in parentheses. Log Share Venezuelans is relative to the 2017 population of the province. Log Share VZs in the province in 2007 interacted with year fixed effects are used as instruments for Log Share of Venezuelans. All regressions include controls for a quadratic in age, education, marital status, household size, and month ∗ year and province fixed effects and province time-trends. Fig. 6. First stage: Stocks of Venezuelans and immigration. 13 A. Groeger et al. World Development 174 (2024) 106437 Table 8 Impact of Venezuelan immigration on crime and safety. Log reported Log reported Crime victim (0/1): Neighborhood Personal security Crime major violent crimes in non-violent crimes LAPOP safety (STD): (STD): Gallup national problem municipality in municipality LAPOP (0/1): ENAHO (a) OLS: Month ∗ Year (ENAHO) or Year (LAPOP/Gallup) and Province (ENAHO/LAPOP) or Region (Gallup) fixed effects Log Share VZs 0.012 −0.003 0.001 0.009 −0.017 −0.001 (0.023) (0.214) (0.003) (0.009) (0.010) (0.002) R-squared 0.586 0.714 0.065 0.085 0.09 0.088 (b) OLS: Month ∗ Year (ENAHO) or Year (LAPOP/Gallup) and Province (ENAHO/LAPOP) or Region (Gallup) FEs and Time-trends Log Share VZs −0.009 −0.373*** −0.010 0.009 −0.010 −0.012*** (0.018) (0.097) (0.007) (0.020) (0.011) (0.002) R-squared 0.596 0.794 0.073 0.101 0.098 0.094 (c1) IV: Month ∗ Year (ENAHO) or Year (LAPOP/Gallup) and Province (ENAHO/LAPOP) or Region (Gallup) FEs and Time-trends Log Share VZs −0.048 −0.420** −0.008 0.016 −0.001 −0.013*** (0.031) (0.172) (0.007) (0.023) (0.016) (0.003) (c2) Men: IV: Month ∗ Year (ENAHO) or Year (LAPOP/Gallup) and Province (ENAHO/LAPOP) or Region (Gallup) FEs and Time-trends Log Share VZs −0.011 0.023 0.013 −0.011** (0.010) (0.024) (0.022) (0.005) (c3) Women: IV: Month ∗ Year (ENAHO) or Year (LAPOP/Gallup) and Province (ENAHO/LAPOP) or Region (Gallup) FEs and Time-trends Log Share VZs −0.006 0.008 −0.005 −0.014*** (0.009) (0.027) (0.018) (0.003) Individuals 234,002 213,093 7998 7962 7997 308,993 Men 3916 3908 3405 141,010 Women 4077 4049 4592 167,957 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at province level in parentheses. Log Share Venezuelans is relative to the 2017 population of the province. Outcome variables noted as STD are standardized. Log Share VZs in the province (region for Gallup outcomes) in 2007 interacted with year fixed effects are used as instruments for Log Share of Venezuelans. All regressions include controls for a quadratic in age, education, marital status, household size and whether employed. Outcomes from ENAHO include additional controls for whether in formal employment and one’s occupation. Table 9 Impact of Venezuelan immigration on local communities. Quality of local Trust neighbors Community Community quality Community likes services (STD): (STD): LAPOP attachment (STD): (STD): Gallup diversity (STD): LAPOP Gallup Gallup (a) OLS: Year and Province (LAPOP) or Region (Gallup) fixed effects Log Share VZs −0.007 0.017** −0.012 0.014 −0.011 (0.008) (0.008) (0.011) (0.012) (0.011) R-squared 0.070 0.061 0.027 0.066 0.053 (b) OLS: Year and Province (LAPOP) or Region (Gallup) fixed effects and time-trends Log Share VZs 0.024 0.016 0.002 0.037*** −0.018* (0.017) (0.013) (0.013) (0.013) (0.009) R-squared 0.085 0.076 0.033 0.075 0.062 (c1) IV: Year and Province (LAPOP) or Region (Gallup) fixed effects and time-trends Log Share VZs 0.033* 0.031* 0.011 0.043* −0.018** (0.019) (0.017) (0.016) (0.022) (0.008) (c2) Men: IV: Year and Province (LAPOP) or Region (Gallup) fixed effects and time-trends Log Share VZs 0.059** 0.059** 0.014 0.058* −0.022* (0.023) (0.024) (0.018) (0.029) (0.011) (c3) Women: IV: Year and Province (LAPOP) or Region (Gallup) fixed effects and time-trends Log Share VZs 0.006 0.006 0.011 0.028 −0.017 (0.021) (0.020) (0.020) (0.022) (0.012) Individuals 7717 7910 7997 7997 7997 Men 3807 3876 3405 3405 3405 Women 3900 4029 4592 4592 4592 *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at province level in parentheses. Log Share Venezuelans is relative to the 2017 population of the province. Outcome variables noted as STD are also standardized. Log Share VZs in the province (region for Gallup outcomes) in 2007 interacted with year fixed effects are used as instruments for Log Share of Venezuelans. All regressions include controls for a quadratic in age, education, marital status, household size and whether employed. 14 A. Groeger et al. World Development 174 (2024) 106437 Overall, we find that increased Venezuelan migration leads to im- Table A.1 First-stage regression for quality of local labor markets provements in both objective and subjective measures of the lives of Overall Men Women Peruvians living in the same locations. This may explain why, even though some media has discussed Venezuelans in a negative light, there Outcome: Log local informal Emp rate has been little political backlash against them in Peru up to this point Export shock in year prior Oct 2017 −3.358** −3.188** −3.602** in time. (1.315) (1.297) (1.351) Log local total population 2017 0.032 0.029 0.034 (0.024) (0.026) (0.024) 5. Conclusion Log local Venezuelans 2007 −0.034* −0.031 −0.035* (0.019) (0.020) (0.019) Log mean local expenditure 2013 −0.433*** −0.440*** −0.424*** In this paper, we study the economic underpinnings of hostility (0.114) (0.114) (0.115) and discrimination against immigrants. In our analysis, we first use Log agriculture rate 2007 −0.037 −0.033 −0.042 a specialized survey of Venezuelan immigrants in Peru to identify the (0.040) (0.039) (0.041) causal effect of local labor market conditions on discrimination against Log manufacturing rate 2007 0.143** 0.156** 0.128* (0.067) (0.069) (0.067) immigrants. Then, we study the flip-side of this analysis, namely, how Log travel duration to Lima 0.034 0.037* 0.030 does the presence of Venezuelan immigrants affect Peruvians’ labor (0.021) (0.022) (0.021) market outcomes, local crime, and their perceptions about security and R-squared 0.821 0.825 0.825 their local community. Observations 7869 4176 3693 We document a causal relationship between the level of employ- Robust standard errors clustered at centro poblado level in parentheses. Local informal ment in the informal sector – where most immigrants are employed employment rate is measured in the 2017 census. All regressions also control for gender, – and reports of discrimination. While fears of political backlash and age, education, marital status, months living in Peru, household socioeconomic strata, anti-immigrant sentiment persist, we do not find any evidence that household size, number of people sharing one’s bedroom, total income, whether in formal employment, and occupation including not working and original municipality Venezuelan immigration to Peru had negative labor market conse- in Venezuela fixed effects. quences for Peruvians or led to increased crime. In fact, the opposite seems to be true with higher local Venezuelan immigration leading to lower crime rates and more educated natives benefiting from higher Declaration of competing interest employment and income, while low-skilled natives remain generally unaffected. These results stand in contrast to those published by the We declare no conflict of interest. Peruvian Central Bank that identify negative effects on employment This manuscript is not under editorial review for publication at any and earnings as a result of Venezuelan immigration, concentrated other journal and has not been published elsewhere. among Peruvian women (Asencios & Castellares, 2020). Our results suggest that recent policy changes by Peruvian authori- ties to limit regular immigration from Venezuela are unnecessary.15 The Data availability International Monetary Fund estimates that 0.4 percentage points of Peruvian real GDP can be attributed to Venezuelan immigrants in 2021 The replication package can be accessed following this link: and argues that ‘‘the long-term benefits of this migration episode will Replication Data for: "Immigration, Labor Markets and Discriminati depend on the speed of labor market integration of entrants [...]’’ (IMF, 2020, p. 6). In light of these results, a better approach would be to on: Evidence from the Venezuelan Exodus in Peru" (Reference data) help facilitate their arrival, regularization, and (formal) labor market (Dataverse). integration (Guerrero-Ble et al., 2020). This would help realize the benefits that the skilled Venezuelan labor force in Peru offers and Acknowledgments potentially generate higher incomes, yield greater fiscal revenues, and also generate support for Peru’s pension system. We are grateful to Diego Aguilar for outstanding research assistance. Beyond this, taken together, our results imply that local labor We thank seminar participants in 2021 at the Economics of Migration markets in Peru that are more informal are better able to adapt to large Senior Seminar, Talca University, Annual Workshop of the Households migration inflows both in terms of migrant assimilation and the impacts in Conflict Network, North American Meeting of the Urban Economics on locals. While the migration of Venezuelans to Peru is quite specific, Association, Asian and Australasian Society of Labor Economics, and this evidence suggests that there are perhaps unexpected downsides to 2022 Midwest International Economic Development Conference. We labor market formalization in less-developed countries. acknowledge financial support from the DFID-WB-UNHCR initiative Finally, our study also highlights a novel approach for measuring ‘‘Preventing social conflict and promoting social cohesion in forced Venezuelan immigrant concentration across Peruvian regions using displacement contexts’’. Groeger and León-Ciliotta acknowledge finan- Google Trend for Venezuelan-specific keywords. Comparing the causal cial support from the Spanish Agencia Estatal de Investigación (AEI), estimates based on this measure with those using our preferred measure through the Severo Ochoa Programme for Centres of Excellence in from administrative records, we obtain remarkably similar results. We R&D (Barcelona School of Economics CEX2019-000915-S). Groeger believe that the proposed approach holds promise to significantly ease acknowledges support from the Spanish Ministry of Science and Inno- data limitations for studies on the impact of immigration, especially in vation through grant number PID2021-122605NB-I00 and RYC2021- developing countries where reliable measures of immigrant settlement 033208-I (co-financed by ERDF ‘‘A way of making Europe’’), and the are often unavailable. Future work should investigate to which extent Generalitat de Catalunya (2021-SGR-00571). León-Ciliotta acknowl- these findings can be generalized beyond the context of our study edges financial support from the Spanish Ministry of Economy and to provide further methodological guidance to empirical immigration Competitiveness through grants RYC2017-23172 and ECO2017-82696. studies. Appendix A. Figures and tables 15 E.g., since June 2019, Venezuelans who want to legally enter Peru have been required to apply for a humanitarian visa in specific Peruvian consulates See Tables A.1 and A.2. abroad and provide documentation that is difficult to obtain, such as passports. 15 A. Groeger et al. World Development 174 (2024) 106437 Table A.2 Impact of local labor market conditions on the labor market outcomes of Venezuelans. Employment Log wages if employed Men Log local informal employment rate 0.018 0.033 −0.220 −0.051 −0.076 −0.950* (0.047) (0.048) (0.174) (0.137) (0.127) (0.520) R-squared 0.055 0.117 0.074 0.122 Observations 4176 4176 4176 3909 3909 3909 Mean outcome 0.939 6.97 Women Log local informal employment rate 0.086 0.091 −0.144 −0.101 −0.098 −0.065 (0.068) (0.073) (0.256) (0.143) (0.130) (0.293) R-squared 0.084 0.135 0.069 0.146 Observations 3693 3693 3693 2869 2869 2869 Mean outcome 0.782 6.81 Origin municipality FE No Yes Yes No Yes Yes OLS/IV OLS OLS IV OLS OLS IV *** p < 0.01, ** p < 0.05, * p < 0.1. Robust standard errors clustered at district level in parentheses. Local informal employment rate is measured in the 2017 census. The predicted export shock in each district in year prior to Oct 2017 is used to instrument for the informal employment rate. 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