July 2020

IZA DP No. 13502: Shoring up Economic Refugees: Venezuelan Migrants in the Ecuadorian Labor Market

Ecuador has become the third largest receiver of the 4.3 million Venezuelans that left their country in the last five years, hosting around 10% of them. Little is known about the characteristics of these migrants and their labor market outcomes. This paper fills this gap, analyzing a new large survey (known as EPEC). On average, Venezuelan workers are highly skilled and have high rates of employment, compared to Ecuadorians. However, their employment is of much lower quality, characterized by low wages and high rates of informality and temporality. Venezuelans have experienced significant occupational downgrading, relative to their employment prior to emigration. As a result, despite their high educational attainment, Venezuelans primarily compete for jobs with the least skilled and more economically vulnerable Ecuadorian workers. Our simulations suggest that measures that allow Venezuelans to obtain employment that matches their skills, such as facilitating the conversion of educational credentials, would increase Ecuador's GDP between 1.6% and 1.9% and alleviate the pressure on disadvantaged native workers. We also show that providing work permits to Venezuelan workers would substantially reduce their rates of informality and increase their average earnings.