The biggest crisis in Venezuelan history has caused great waves of immigration to neighbouring countries in Latin America. Peru alone experienced inflows of more than one million Venezuelan immigrants. Such influx, largely concentrated in Peru’s urban areas, can pressure the local labor market. In BSE Working Paper Nº 1350, “Immigration, Labor Markets, and Discrimination: Evidence from the Venezuelan Exodus in Peru,” Andre Groeger, Gianmarco León-Ciliotta, and Steven Stillman combine data from the Peruvian labor force survey and different public opinion polls with a specialized survey on the experiences of Venezuelan immigrants in Peru, and migrant registry data to explore the labor market experience of Venezuelan immigrants and Peruvian natives.

The Great Venezuelans Exodus in Peru

Due to sustained economic growth, Peru has become an attractive destination for Venezuelan immigrants fleeing from economic and political turmoil at home. Figure 1 shows the number of Venezuelans in Peru. The red dashed line is when the Peruvian government implemented a temporary residence permit which allowed Venezuelans to work legally. Through the persistent influx of Venezuelans, Peru’s population has increased by 2 percent between 2016 and 2020. Venezuelans are, on average, more skilled than Peruvians. Nevertheless, there is some evidence documenting negative attitudes of natives towards the new immigrants. These opinions include Venezuelans’ supposed low contribution to the economy and that the migrants commit criminal activities.

Immigrants are more discriminated against in locations with weaker informal labor markets

Encuesta Dirigida a la Población Venezolana que Reside en El País (ENPOVE) is a specialized survey collecting data on Venezuelan immigrants in Peru. One important question asked is about the immigrants’ experience with the locals.The authors use this survey to explore factors determining the chance that discrimination will happen. Exogenous trade shocks at local and industry levels are used as an instrument to solve the selection problem that Venezuelans may choose to live in the locations where the labor market is strongest.

Figure 2 shows the percentage of Venezuelans who felt discriminated against. Most Venezuelan immigrants work in the informal sectors, which take the highest share of the Peruvian economy. The authors found that immigrants in locations with weaker informal markets, namely locations with lower informal employment, experience higher discrimination than those who live in locations where markets are stronger. To be precise, a 10 percent decrease in informal employment caused an average of 2.3 to 3 percent increase in perceived discrimination. The effect is stronger for men than women. The authors find that discrimination occurs predominantly in public spaces for men and public transit for both genders.

Despite the media’s claims, Venezuelan immigrants bring about better socioeconomic outcomes

As shown by the polls, some Peruvians contend that Venezuelan immigrants contribute little to the economy. Moreover, immigrants have been related to the rise in crimes by some media outlets. To verify this relationship causally, the authors examine how the increased number of Venezuelan immigrants affects the local Peruvian economy and society. The official immigrant concentration data recorded by the Peruvian government is used to track the labor market outcomes and crimes. A problem with this analysis is that local shocks affect both economic performance and Venezuelans’ locational choices. This may lead to a biased estimation of the impact of immigrants. The authors solve this problem by using a historic immigrant network instrument as captured by the number of Venezuelan immigrants in 2007 as instrument.

In contrast to bad portraits from some media and negative views from some locals, the analysis shows that a higher number of Venezuelan immigrants leads to better economic outcomes among Peruvian natives. This positive impact includes an increase in employment, household income, and expenditures. The authors attribute this to the fact that Venezuelan immigrants have relatively higher levels of human capital, compared to natives. Also, they mainly concentrate in the service sector, which may allow Peruvians – especially women – to increase labor market participation.

Furthermore, the authors found evidence that locations with more immigrants tend to have lower reported non-violent crime, better-reported quality of local service and community, and higher reported trust in neighbors.

Conclusions and implications

Before 2017, the Peruvian government required immigrants to hold a passport. Later, the policy was changed to accommodate Venezuelan immigrants, as obtaining a passport was difficult during the crisis. The government provided a temporary residence permit that allows Venezuelans to work, study, pay taxes, and open bank accounts. In 2019, there was a policy change to limit immigration from Venezuela. This policy includes that Venezuelans must apply for a humanitarian visa and provide some documents which are hard to obtain.

Since this study proves that Venezuelan immigration has led to better socio-economic outcomes in Peru, the authors suggest that the recent policy is unnecessary. The better solution would be to further facilitate the arrival of Venezuelans and step up integration efforts.