Immigration, Labor Markets and Discrimination: Evidence from the Venezuelan Exodus in Perú

Venezuela is currently experiencing the biggest crisis in its recent history. This has led more than 5.6 million Venezuelans to emigrate, one million of those to Peru, which amounted to an increase of over 2 percent in the Peruvian population. Venezuelan immigrants in Peru are relatively similar in cultural terms, but, on average, more skilled than Peruvians. In this paper, we first examine Venezuelans’ perceptions about being discriminated against in Peru. Using an instrumental variable strategy, we document a causal relationship between the level of employment in the informal sector – where most immigrants are employed – and reports of discrimination. We then study the impact of Venezuelan migration on local’s labor market outcomes, reported crime rates and attitudes using a variety of data sources. We find that inflows of Venezuelans to particular locations led to increased employment and income among locals, decreased reported crime, and improved reported community quality. We conduct a heterogeneity analysis to identify the mechanisms behind these labor market effects and discuss the implications for Peruvian immigration policy.