The effects of the Venezuelan diaspora on Peru’s labour market: Evidence from the enaction of a Temporary Stay Permit to Venezuelan migrants

Abstract: In January 2017, amidst the ongoing social strife in Venezuela, the Peruvian government enacted a working permit “Permiso Temporal de Permanencia” endowing Venezuelan migrants with the right to work and with access to health and education services. Given the spatial concentration of Venezuelan migrants in Peru and the clear temporal cut I unfold a difference-in-differences methodology to exploit the differences in the labor market before and after the policy was introduced at the individual level. Overall, I find an indirect effect of the policy on the Peruvian labor market through an increase in competition in the informal sector. The probability of being employed in the informal sector drops across the various educational levels. Moreover, workers with primary and secondary education report a decrease in their wages in the aftermath of the policy implementation. There is suggestive evidence that the TSP did not improve the assimilation of Venezuelan refugees in the formal economy.