Jeremy Lebow (Duke University)

Immigration and Occupational Downgrading in Colombia

Abstract

Migrants around the world are often over-educated in their occupation relative to natives. In this paper, I study the effect of migrant occupational downgrading on native economic outcomes in the context of Venezuelan mass migration to Colombia. Using variation across 79 metropolitan areas, I estimate a CES model of labor demand with imperfect substitutability between migrants and natives, and I develop a method to incorporate migrant downgrading into this framework. I find that downgrading has large consequences for hourly wages of less educated natives, driven by high migrant-native substitutability in low-skill jobs and low substitutability across education groups, both of which may be more common in the developing country setting. In a counterfactual in which I reallocate migrants to compete within their education group, there are substantial reductions in inequality and increases in total output. The results highlight the importance of policies to reduce migrant downgrading, especially given the increasing global prevalence of large push-factor migration waves, which are more likely to result in migrant downgrading and disproportionately affect developing countries.

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