Regional Spillovers from the Venezuelan Crisis: Migration Flows and Their Impact on Latin America and the Caribbean
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund
  • | 2 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund

As a new migration crisis is unfolding in Europe because of the war in Ukraine, the purpose of this paper is to also highlight the ongoing migration crisis in Latin America and the Caribbean (LAC) due to Venezuela’s economic collapse. The stock of Venezuelan migrants reached 5 million in 2019, most of which had settled in other LAC countries. Following a temporary halt during the pandemic, migration from Venezuela has resumed, with the stock of migrants reaching 6.1 million in 2021. These migration flows are expected to continue in the coming years, which can strain public services and labor markets in the recipient economies in LAC. This Departmental Paper focuses on migration spillovers from the Venezuelan economic and social crisis. It sheds light on how migration can raise GDP growth and affect fiscal and external positions in host countries. It also discusses policy options, including greater support for education and integration into the workforce, which could help migrants find jobs to match their skills and help raise growth prospects in recipient countries.

Abstract

As a new migration crisis is unfolding in Europe because of the war in Ukraine, the purpose of this paper is to also highlight the ongoing migration crisis in Latin America and the Caribbean (LAC) due to Venezuela’s economic collapse. The stock of Venezuelan migrants reached 5 million in 2019, most of which had settled in other LAC countries. Following a temporary halt during the pandemic, migration from Venezuela has resumed, with the stock of migrants reaching 6.1 million in 2021. These migration flows are expected to continue in the coming years, which can strain public services and labor markets in the recipient economies in LAC. This Departmental Paper focuses on migration spillovers from the Venezuelan economic and social crisis. It sheds light on how migration can raise GDP growth and affect fiscal and external positions in host countries. It also discusses policy options, including greater support for education and integration into the workforce, which could help migrants find jobs to match their skills and help raise growth prospects in recipient countries.

1. The Venezuelan Exodus: An Unprecedented Economic and Humanitarian Crisis

Venezuela experienced one of the most severe economic and humanitarian crises on record during the last decade. Real GDP is estimated to have contracted by more than 75 percent between 2013 and 2021—the single largest economic collapse for a non-conflict country in almost half a century. Worsening economic conditions, collapsing basic services, and deteriorating security led 7 million Venezuelans (23 percent of the population) flee the country by August 2022, most of whom have settled in other LAC countries. Following a temporary interruption in 2020 due to the COVID-19 pandemic, migration outflows from Venezuela have resumed and are expected to continue going forward, reaching about 8 million by 2025.

Unprecedented Economic and Humanitarian Crisis

The contraction in Venezuela’s real GDP during the last decade is among the largest and most protracted in modern history (Figure 1).1,2 The Venezuelan economy contracted by about 75 percent between 2013 and 2021, the largest contraction in almost half a century for a country not at war. The closest comparators are countries that were in active conflict, such as Libya, which lost 80 percent of its GDP during the conflict that accompanied its revolution. In Venezuela’s case, economic mismanagement accelerated and amplified the economic collapse, leading to large fiscal deficits, record-high and long-lasting hyperinflation, massive currency depreciation, and a debt crisis with most of Venezuela’s external debt in default.

Figure 1.
Figure 1.

Largest Real GDP Declines in a Five-Year Range

(Percentage points)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: IMF’s World Economic Outlook; and IMF staff estimates.Note: Using data from 1970 onwards. Economic conditions including decline in oil prices.

The collapse in economic activity was driven in part by plummeting oil production—Venezuela’s major export (Figure 2). By 2020, oil production levels had reached lows not seen since the 1930s. After averaging 2.8 million barrels per day (mbpd) during 2008–13, crude oil production fell to an average 0.9 mbpd in 2019 and bottomed out to about 0.4 mbpd in mid-2020. The sharp decline, which preceded the introduction of oil sanctions by the United States in January 2019, reflected both internal and external factors. Specifically, the oil production drop is explained by the global oil price collapse of 2015, the severe mismanagement of the oil sector domestically, declining sectoral investment (reflected by a drop in the rig count to zero in June 2020), and a loss of human capital (seen, for example, by the separation and eventual imprisonment of 65 Petróleos de Venezuela S.A.executives in 2017).3 Moreover, power outages were another factor, impacting oil production and economic activity in general. As a result, despite being an oil producer, Venezuela has experienced widespread fuel shortages around the country, which has disrupted mobility and has significantly increased transportation costs.

Figure 2.
Figure 2.

Venezuela: Oil Production, 2011–22

(Million barrels per day)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Source: OPEC.

Faced with macroeconomic instability and mismanagement, the rest of Venezuela’s economy was also severely disrupted and continues to face challenges. According to official data from the Central Bank of Venezuela, non-oil GDP fell by about 56 percent between the first quarter of 2013 and the first quarter of 2019. The largest contraction (96 percent) was in the construction sector, followed by financial services and manufacturing, with contractions of 88 percent and 83 percent, respectively. The agricultural sector has also seen a sharp decline in production. In addition, firms continue to face unreliable provision of basic services, lack of access to credit, and a shortage of skilled workers given migration outflows.4 The marked reduction in disposable income has severely depressed aggregate demand. Lower domestic absorption, coupled with the lack of external financing, has been a drag on imports. On the export side, Venezuela has been able to place its heavy crude oil in the Asian market at a substantial price discount, alleviating in part the impact of sanctions. Against this backdrop, the current account has been recording surpluses since 2017, except in 2020.

Social services and economic integration were also severely affected by the crisis. Facing scarce resources in the provision of basic services, the state has scaled back its presence in rural regions in favor of the capital, Caracas. Basic government functions like policing, road maintenance, health care, and public utilities have been abandoned in many regions. Paramilitary armed groups have partly replaced the state security apparatus near the border between Venezuela and Colombia.5 In addition, the state’s retrenchment has led to Venezuela’s breakup into more localized and segmented economies with only nominal links to Caracas. Alongside this breakdown in internal economic ties, regions close to Venezuela’s borders have resorted to smuggling and cross-border trade for survival. Agricultural towns in Venezuela’s interior have sunk into subsistence as the collapse of the road system and gasoline shortages decimated domestic trade. Tourism hot spots, however, have survived catering mainly to high income individuals.

As part of its macro instability, Venezuela also experienced one of the longest bouts of hyperinflation in history (Figure 3). The rise in prices reached hyperinflation levels as massive fiscal deficits (averaging 16.8 percent of GDP between 2014 and 2019) were monetized to compensate, albeit unsustainably, for the drop in other sources of budget financing such as oil and tax revenues. After reaching a peak of more than 200 percent in January 2019, monthly inflation declined to below 50 percent since in February 2021. This decline is explained by policies taken to tighten liquidity, curtail the public sector deficit, raise reserve requirements, and ramp up foreign exchange interventions, which ultimately contained the rate of exchange rate depreciation and inflation.

Figure 3.
Figure 3.

Venezuela and Germany Hyperinflation Episodes

(m/m percent change)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Madison database, IMF’s World Economic Outlook; and IMF staff estimates.

With the output collapse and hyperinflation, labor market conditions progressively deteriorated and remain weak. Although more than half of the working-age population is employed, labor participation is the lowest in LAC.6 Formal employment has declined while self-employment has risen in relative terms, providing alternative sources of income. The share of formally employed people in the public and private sectors fell by 15 percentage points between 2014 and 2019/20, while the share of self-employed and independent workers rose by 14 percentage points to 45 percent of employment nationwide.7 Labor income has also suffered as hyperinflation decimated the purchasing power of salaries.8

As a result of the economic collapse, social conditions have deteriorated and poverty has risen sharply. According to the national living conditions survey ENCOVI 2019/2020, income poverty almost tripled from 33.1 percent of the population in 2013 to 96.2 percent in 2019/2020, and extreme poverty has increased nearly sevenfold to 79.3 percent in the same period. The country is experiencing a reversal of the progress achieved in previous decades in health and nutrition, particularly for mothers and children, as well as in the control of communicable diseases. For example, infant mortality rose from 14.2 percent in 2008 to 21 percent in 2019, while maternal mortality increased from 115 to 125 deaths per 100,000 live births between 2013 and 2017.9 A third of the children younger than five are chronically malnourished, one of the highest rates in LAC. New HIV infections increased by 24 percent between 2010 and 2016,10 while cases of tuberculosis and malaria have risen by 41 percent and 65 percent between 2014 and 2016, respectively.11 COVID-19 vaccination rates are low, with only half of the population fully vaccinated (compared to two-thirds in LAC).

Ensuing Exodus in Venezuela

Dire economic and humanitarian conditions triggered the largest migration crisis in LAC’s history. The Venezuelan crisis led to migrant outflows comparable to those of the largest world migration crises of the past half century (Figure 4). About 7 million Venezuelans are estimated to have left the country as of August 2022,12 surpassing the levels seen in Ethiopia (1980), Iraq (1988, 2004), South Sudan (2014), and the number of refugees who have fled the war in Ukraine (6.3 million as of August, 2022 according to UNHCR).13 However, the number of Venezuelan migrants accounts for 23 percent of the total population, less than in Syria (2012) and Afghanistan (1977), where it accounted for more than 35 percent of the population five years after the crises started. All these other migration episodes were due to armed conflicts, however, hence push factors were more severe. Venezuela is the country with the largest migration outflows in recent years for a non-conflict country.

Figure 4.
Figure 4.

International Comparison of Migration Episodes

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: IMF’s World Economic Outlook; World Development Indicators, United Nations Refugee Agency; and IMF staff estimates. Note: t defined as the first year when refugees exceed 500k. Only countries with at least 2 million refugees are shown.

The destination and composition of Venezuela’s migrant flows changed as the crisis intensified. Most migrants have settled in other Latin American countries, while some have migrated to other regions, mainly to the United States and Spain. Colombia has received the largest number of migrants, totaling 2.5 million or about 5 percent of the Colombian population in August 2022.14 Chile, Ecuador, and Peru have also received sizable flows, with the combined number of migrants exceeding 2 million (more than 3 percent of the local population on average). Although Aruba and Curacao have received a smaller share of migrants, they represent a much larger share of their populations, ranging between 9 and 15 percent. With the onset of the pandemic, migration flows slowed in 2020 as countries closed their borders due to sanitary concerns (Chapter 4). However, migration flows resumed in 2021–22 as countries reopened their borders and are expected to rise further as some countries have started to grant protective status to Venezuelan migrants (for example, Colombia and Ecuador).

The Venezuelan migration crisis has featured three major phases. The composition of migrants has evolved since the onset of the Venezuelan crisis, with the demographic and socioeconomic conditions varying depending on the severity of the collapse in economic and social conditions (Paez and Vivas 2017).

Figure 5.
Figure 5.

Number of Venezuelans in Select South American Countries

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: U.N. High Commissioner for Refugees and local authorities.
  • First phase: The first migration wave was in the early 2000s, prior to the economic crisis. The initial wave was characterized by people with a high level of education, strong professional qualifications, and ample financial resources. Many of these migrants were business owners or figures from the political opposition.

  • Second phase: The middle class started leaving Venezuela since 2014. People with technical degrees and young people with a university degree, but no professional experience, left the country in search of better employment opportunities abroad once the economic crisis started affecting them. Many ended up accepting formal but unskilled jobs. This phase also included several political opponents and human rights activists. Colombians were also deported from Venezuela following diplomatic tensions between the two countries.

  • Third phase: Since 2017 and 2018, when the Venezuelan economy completely collapsed, migrants have tended to be from low-income households, with a lower level of tertiary education, few professional skills, and little financial resources. The numbers of such migrants leaving the country rose exponentially in this phase—with an increased prevalence of families (often single-headed households, consisting of a mother and several young children) leaving Venezuela, compared to prior flows that consisted primarily of adult men travelling alone or adult couples. One reason behind this shift is that many of those who left Venezuela during this period traveled to reunite with a relative who had already migrated in previous years.

The demographic profile of migrants is like that of the local populations in host economies in the region. Almost two-thirds of Venezuela’s migrants are of working age, and almost half are female. Migrants who headed to Venezuela’s immediate neighbors—Brazil, Colombia, Guyana, and Trinidad and Tobago—are younger and more educated than local populations but have lower educational attainment than Venezuelans who moved to other countries farther away—such as Argentina, Chile, Costa Rica, Paraguay, and Uruguay (with more than half of Venezuelan migrants in these countries having a bachelor’s or master’s degree).15

Future Migration Flows

The COVID-19 pandemic—with its related restrictions on mobility and border closures—reduced the flow of Venezuelan migrants from an average of 1.7 million people per year in 2018–19 to 0.6 million in 2020, most of which took place in the first few months of the year. Migration flows have resumed in 2021–22, with 1.3 million migrants having left Venezuela since end-2020, and are expected to continue going forward, although at lower levels than before the pandemic. Typical migration “push” factors are expected to weaken in coming years due to the economic recovery in Venezuela supported by higher global oil prices and de facto dollarization. The recent decline in inflation will also attenuate the incentives to migrate.

However, the country and its population remain highly vulnerable to additional shocks. Although the economy appears to be gradually recovering from its severe collapse, exposure to key risks remain in several areas. For instance, further deterioration in electricity supply could exacerbate the humanitarian crisis by hitting the provision of water and health services. Other risks include more acute shortages of gasoline and diesel, which would not only be highly disruptive for economic activity but could also exacerbate electricity shortages. All these factors could accelerate migration outflows to neighboring countries.

Given the high degree of uncertainty about economic and social prospects, the authors consider two migration scenarios when building economic projections in the following chapters. The baseline scenario assumes that the number of Venezuelans residing abroad reaches 8.4 million in 2025, about 1.4 million higher than the current number of Venezuelan migrants. As a sensitivity analysis, we consider a lower bound scenario, in which the number of migrants reach only to 7.4 million by 2025 due to weaker push factors resulting from a stronger than expected economic recovery in the home country.

The rest of the paper discusses the main economic spillovers across LAC from these migration flows. Chapter 2 discusses the impact of Venezuelan migration on individual labor markets based on available granular evidence for Colombia. Chapter 3 studies the overall macroeconomic and fiscal implications of migration flows—the main spillover channel from the crisis over the past 5 years—on recipient countries in LAC . Finally, Chapter 4 discusses the migration policies implemented across countries so far and strategic policy priorities to enhance growth and welfare in recipient countries going forward.

2. Labor Market Outcomes from Migration in Recipient Economies

The main spillover channel from the Venezuela crisis has been through migration—raising questions about labor market effects in host countries. Younger and more educated than local populations, the influx of migrants seeking jobs has encountered a diverse set of labor market conditions in recipient economies—with common language and culture as advantages but legal and non-legal barriers as challenges. In terms of outcomes, working age migrants have faced higher unemployment, are more likely to initially work in the informal sector, and earn less than local workers. The wage gap, which rises with the education level, points to a misallocation of the migrants’ human capital. Overall, Venezuelan migration tends to increase labor informality in recipient countries, but there is no evidence of displacement of local workers. Labor force participation, employment, and informality of local workers are all broadly unchanged, though there is some downward pressure on wages particularly in the informal sector. Given productivity losses due to labor misallocation in the near term, GDP growth stands to benefit from deeper integration of migrants into the formal economy.

Migration Flows and Labor Market Implications

A key channel through which migration impacts economic outcomes in other countries is the labor market. The arrival of migrants directly increases labor supply. The overall impact on equilibrium labor market outcomes such as wages, labor force participation, and employment depends on various factors that relate both to the composition of migrants and the destination country features. These include the timing, magnitude and demographic composition of the migrant flows, the labor market characteristics and rigidities in the recipient country, and whether migration is being driven by pull (labor demand) or push (labor supply) factors.

Past evidence focused on pull-factor driven economic migration to (mostly) advanced economies finds positive effects of migration on labor outcomes.16 When there are complementarities between native and immigrant workers, immigrants can foster a move of natives toward new occupations and foster aggregate productivity gains in the economy.17 The resulting gains in aggregate income can explain the very limited adverse effects found by the empirical literature on wages and employment of native workers, especially when considering long-term horizons. In the short term, however, domestic disruptions can occur in the presence of labor market rigidities, and there is some evidence (see Åslund and Rooth 2007, April 2020 World Economic Outlook—WEO, Chapter 4) that gains from migration can be smaller in the presence of higher initial unemployment in the recipient economy. These mechanisms notwithstanding, cross-country evidence from advanced economies suggests significant dynamic gains from immigration, even in the short run (April 2020 WEO, Chapter 4).

The Venezuelan migration episode is somewhat different from the episodes studied in this literature. The Venezuela experience shares some characteristics with past refugee crises, as push factors are driving migrants away from Venezuela regardless of the economic conditions of the destination country. As is the case with Venezuelans, refugees from other migration episodes have tended to face larger legal or non-legal barriers to enter labor markets, posing challenges to full economic integration. There is also empirical evidence that labor market outcomes of refugees are significantly worse than those of the native population (Brell, Dustmann, and Preston 2020; Evans and Fitzgerald 2017; IMF 2017a, 2017b). However, Venezuelan migrants have structural advantages over other large migration episodes. Venezuelans tend to be more educated than the average citizen of destination economies, and language and cultural assimilation barriers are relatively low in Spanish-speaking countries. In addition, with large informal sectors in many LAC countries, there is a sizeable margin of labor market absorption—particularly for low-skill migrant workers.

This chapter explores the labor market outcomes of Venezuelan migrants, their characteristics, and their impact on local labor markets. First, it discusses the labor market flow magnitudes and recipient labor market characteristics across the region. Second, it studies labor market outcomes of migrants vis-à-vis locals and how migration flows alter equilibrium unemployment, labor force participation, and wage dynamics. This requires micro-data that identifies migrants from locals and contain information on the demographic composition of both groups. Among the LAC countries with large Venezuelan migration, Colombia has the most detailed nationally representative data source covering migrants and locals in both the formal and the informal sectors. For this reason, the chapter focuses on the role of Venezuelan migrants in the Colombian labor market and uses these results to inform the modelling approach that studies the macroeconomic effects of migration in Chapter 3. Third, the findings are contrasted with those of other studies.

Migrant Flows across Regions and Local Market Impacts

During the height of the Venezuelan exodus before the pandemic, most labor markets in LAC had moderate unemployment (<10 percent) and low formality (<60 percent), with a wide variation across countries. For large countries such as Argentina or Brazil, the stock of Venezuelan migrants accounts for less than 1 percent of the local population—with limited potential for labor market disruptions. However, it accounts for more than 10 percent in some small states in the Caribbean.

The variation across recipient countries is substantial for both the size of migration and the labor market structure. Figure 6 shows the correlation between total migration flows from Venezuela and selected labor market characteristics across countries. The vertical axis shows the stock of Venezuelan migrants as a share of the local population while the bubble size represents the total number of migrants received in each country. The figure shows that migrants arrived to substantially diverse labor markets in the region. While some migrants arrived at countries with large formal sectors and relatively high wage flexibility such as Chile, others arrived to countries with smaller formal sectors and more rigid wages such as Colombia, Ecuador, and Peru. Interestingly, countries that received the most migrants as a share of their population (Colombia, Guyana) had above average unemployment at the start of the migration wave with somewhat limited capacity for formal sector employment absorption. Overall, initial labor market conditions appeared to have been drastically different across countries before the arrival of Venezuelan migrants. Systematic correlation between the size of migration flows and the destination characteristics appears to be weak. Instead, migratory patterns appear to have been primarily driven by geographical proximity with neighboring Colombia, which received more than a third of the total migration flows. In this regard, local labor market pull factors seem to have played a secondary role.

Migrant Outcomes Relative to Local Workers and Misallocation

Micro-level data reveal important patterns in migrants’ characteristics and labor market outcomes in Colombia. First, Venezuelan migrants appear to be more educated than the average Colombian. The share of migrants with at least a high school degree increased from 30 to 45 percent between 2016 and 2018 and has remained broadly unchanged since.18 As of 2019 the share of migrants with a high school degree was 4 percentage points higher than the share of locals with the same level of education (46 vs. 42 percent), while the share of migrants with some tertiary education is slightly lower than that of the local population (18 vs. 20 percent).19 Second, migrants are younger, with an average age of 28 compared to an average age of 32 for Colombians. These differences partially explain the migrant’s higher labor force participation rate than that of the locals. About 74 percent of the Venezuelan migrants actively sought a job, compared with 63 percent of the locals.

Figure 6.
Figure 6.

Migration Patterns and Labor Market Characteristics

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: UN Migration database WEF; IADB; and staff calculations.Note: Latest available data.

Venezuelan migrants faced some difficulties integrating into the local labor markets in the initial years. As of 2019, about 16 percent of economically active Venezuelan migrants who had migrated within the past five years had not found a job and were unemployed, a significantly higher unemployment rate than the 10 percent for Colombians. Moreover, when looking at the type of employment, 67 percent of migrants (vs. 56 percent of locals) who find jobs do so in the informal sector either through small informal firms or self-employment. A similar percentage of Venezuelan migrants do not have access to the social security system, while the great majority of Colombians do. As shown in Figure 7, the gaps in labor force participation, unemployment, and formality rates are present even after controlling for demographic differences between migrants and locals and have widened over time. Overall, as of 2019, about 74 percent of Venezuelan migrants were seeking employment, 62 percent had found a job, and more than two-thirds of those jobs were in the informal sector. The Venezuelan migrants’ high labor force participation rate could decline in the future as non-working-age family members follow the early migrants.

Figure 7.
Figure 7.

Migrant Characteristics and Labor Market Outcomes

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Household surveys (GEIH); and staff calculations.

When looking at the employed, migrants earn less than locals, even after controlling for demographic characteristics (see wage premiums in Figure 7). The average wage gap between migrants and locals is about 35 percent. When controlling for differences in demographics and location, the average wage gap is reduced to 28 percent. Remarkably, this gap is smaller than for migrants that arrived before 2017; it was reduced during the period when special permits were issued and it widened slightly in the second half of 2019 after the issuance of permits stopped. This somewhat mirrors the trends in informality rates between migrants and locals and suggest a role of migration policies in affecting migrant’s labor market outcomes. Importantly, these gaps are estimated for the case of Colombia, whose policies of integration have been more generous than in most other LAC countries (Chapter 4).

The wage gap indicates significant human capital misallocation, especially in the first years of migrant employment. By education levels, gaps in wages between migrants and locals are greater for workers with high school and tertiary education relative to comparable local workers. These gaps can be large, migrant workers with tertiary education earn more than 50 percent less than local workers with similar qualifications at similar locations (see wage premia by education in Figure 7).

This wage gap is partly due to educated migrants being employed in the informal sector, reflecting both structural and legal factors that make formal employment difficult. Many migrants do not have the legal right to work, which prevents them from finding a formal job. Even if they could apply for formal work permits, it takes time and informal employment can be the only short-term option. In addition, informality allows firms to bypass costly social security contributions, payroll taxes, and other non-wage labor costs, which can be large in the LAC region, averaging about 50 percent of wages (IADB 2017). These labor market rigidities result in high informality of migrants relative to locals even after controlling for worker and location characteristics (see informality gaps, Figure 7). A Venezuelan migrant with tertiary education is about 20 percent more likely to work at a small informal firm20 than a similarly educated local worker.21 Interestingly these gaps are present among not only migrants with Venezuelan citizenship, but also migrants from Venezuela with Colombian citizenship, which suggests the existence of regulatory bottlenecks that go beyond migratory legal status and are perhaps related to the validation of Venezuelan university degrees along with other frictions that limit labor market employment opportunities for recently arrived migrants.

Other LAC countries are also seeing a rise in human capital from Venezuelan migration, but large gaps in informality and wages suggest that it remains largely underutilized. The misallocation of educated migrants into low-skill informal jobs suggests, at best, short-run productivity losses that limit economic gains from migration. At worst, if migrants are not integrated into jobs matching their skills over the medium-term, these productivity losses can become permanent and limit future productivity growth both from current and future migrants. The high wage gaps and informality rates for migrants highlight the need for active labor market policies to further integrate these workers into the formal sector.

Impact on Local Workers

The chapter also examines the impact of migration on the labor market outcomes for local workers. Assessing the effects of migration on equilibrium labor market outcomes is challenging, but—consistent with previous studies—the evidence does not point out to significant displacement effects of local workers.

The relationship between migration inflows and labor markets is explored using variation in inflows across regions in Colombia. This approach broadly follows the literature exploiting spatial differences in the evolution of natives’ labor outcomes in high vs. low immigration areas (Borjas 2016, Card 1990, Peri and Yasenov 2015, Blau and Kahn (2015) and are in line with the analysis from Santamaria (2020), who does not find large impacts of Venezuelan migration on total employment of native Colombians.22

From a cross-sectional perspective, regions with greater migration inflows did not experience larger declines in (male or female) labor force participation rates nor increases in unemployment. Aggregate unemployment did increase in Colombia, but this affected most regions regardless of whether they received large migrant inflows or not. There is also no evidence of a negative relationship between migration and labor force participation in the data. If anything, there is a slight positive relationship.

Migration increases informality, particularly when measured as those not covered by social security. Formalization improved overall in Colombia before the COVID-19 pandemic, but regions with greater migrant inflows experienced a smaller improvement (Figure 8). The relationship is particularly strong when measuring informality as the share of employed who are not covered by social security. Under an alternative definition of informality, which emphasizes the size of firms, the relationship is weaker. Venezuelan migrants work in a diverse set of firms in Colombia but appear to do so in informal contractual arrangements. There are no discernible significant effects on the informality rates of Colombians.

Figure 8.
Figure 8.

Migration and Equilibrium Labor Market Outcomes, 2016–19

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Household surveys (GEIH); and staff calculations.

Regression-based analysis finds no evidence of a causal link between migration and labor force participation and unemployment. Throughout all the specifications summarized in Figure 9, which control for other economic factors, there is no evidence of significant adverse effects of migration from Venezuela on either the labor participation rate or the unemployment rate.

However, there is some evidence that migration placed downward pressure on wages, particularly in the lower-paying informal sector. There is a negative non-significant correlation between mean wages (both for Colombians only and overall) and migration inflows (Figure 10), with a stronger negative association in informal sector wages (Figure 9). This is present both in the raw data as well as when controlling for worker characteristics. Although it is hard to establish a causal connection, these results are consistent with the hypothesis that migrant inflows place some downward pressure on wages in the low-skill informal sector, given that migrant employment has been concentrated in this sector.

Figure 9.
Figure 9.

Immigration and Labor Market Outcomes: An IV Approach

(Regression coeffcients)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Household surveys (GEIH); and staff calculations.Note: Regression coeicients from instrumental variable diff-in-diff regression controlling for age, education and gender composition. Dependent variable is change in share of people who reported having lived in Venezuela five years before from 2016 to 2019. Change in Venezuelan migration is instrumented by the driving time from the departmental capital of each region to Caracas from Google Maps.
Figure 10.
Figure 10.

Changes in Average Wages and Migration Inflows

(2016–19 nominal change)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Household surveys (GEIH); and staff calculations.

Evidence from Other Countries

The findings for Colombia are consistent with those from studies for other LAC countries. In Chile, 2017 census data suggest that Venezuelan migrants tend to be more educated and younger and participate more in the labor force than the native population (Banco Central de Chile 2019). However, the impact on the local labor market is unclear as no data exists on migrant characteristics and labor market outcomes. In Peru, Asencios and Castellares (2020) find that Venezuelans are more educated than locals using employment surveys from the cities of Lima and Callao, where immigration increased the economically active population by 1 percent. They also find very small effects on selected groups of low-skill workers (particularly women), with positive aggregate effects on overall employment which imply gains in productivity and potential GDP. Studying a migration wave from Nicaragua into Costa Rica, Gindling (2009) finds a moderate impact on low-skill women wages, with no effect on the salaries of men.

The findings for Colombia are also consistent with those from studies of the Syrian migration. Del Carpio and Wagner (2015) and Aksu, Erzan, and Kirdar (2022) study the impact of Syrian migration on Turkey’s labor market and find similar effects on informal employment and resulting wage pressures of native workers in this sector, with positive employment outcomes for natives in the formal sector.23 In Europe, other studies have found similar wage and employment gaps. A recent World Bank review of the evidence— from mostly advanced economies—reports small wage effects and, perhaps because of the lack of a flexible informal sector, more significant displacement effects for low-skill workers that directly compete with migrants (World Bank 2020). Overall, these studies echo the Colombian findings: migrant inflows can have limited adverse effects on localized low-skill segments of the labor market, with mostly positive effects on aggregate outcomes.

3. The Macroeconomic Effects of Migration in Recipient Economies

Spillovers from Venezuela’s crisis to LAC since 2017 have been driven mainly by migration flows, while trade and financial spillovers have been limited. Migration flows were large prior to the pandemic and have resumed during 2021–22. Positive growth spillovers in recipient countries are driven by the boost to the labor force and domestic demand. Accounting for various frictions, this chapter estimates that migration flows have raised annual GDP growth in the largest recipient economies in LAC by 0.1–0.25 percent on average. If migration flows continue over the next few years as expected, output gains should accumulate in the region, including through higher investment and productivity. In terms of adjustment costs, migration inflows place downward pressure initially on both fiscal and external balances. On the fiscal side, higher spending related to migration (for example, healthcare, education, other services) ranges between 0.1 and 0.5 percent of GDP across recipient countries through their transition, but the pressures on the fiscal balances should dissipate over time as the tax base expands in line with the expansion in economic activity.

Spillover Channels from Venezuela’s Crisis

This chapter studies the macroeconomic effects from migration flows from Venezuela on recipient countries in LAC since 2017. Traditional trade and financial spillovers have been limited during this period due to the earlier collapse in trade and financial flows between Venezuela and the LAC region, limited regional exposures to Venezuela’s banking system, and minimal market contagion (see section below). In contrast, migration flows from Venezuela to LAC were substantial between 2017 and 2019 and, following a brief pause in 2020, they have resumed in 2021–22 and are expected to continue going forward.

The main effects of migration on recipient economies are on economic activity, labor markets, and fiscal balances. These effects depend on the size and characteristics of the migration flows as the influx of migrants affects both the supply of labor and human capital available in the economy. From the demand side, it also affects private demand, consumption and investment, and the amount of additional fiscal spending required to provide services (health, education, housing) to migrants and help them integrate into the economy. These effects vary over time, depending on the ability of the recipient country to absorb the migrant flows into the labor market. This chapter quantifies these effects considering the migration scenarios discussed in Chapter 1: (1) a baseline scenario, where the number of migrants reaches 8.4 million by 2025 and (2) a lower bound scenario, where the number of migrants reaches 7.4 million by 2025.

This chapter uses two approaches to estimate the macroeconomic impact of migration on the recipient countries. Growth accounting is used to assess the impact of migration on growth since 2017. To assess the dynamic macroeconomic effects, the growth accounting results are augmented with data on private spending and the fiscal costs of migration to examine the general equilibrium effects. To do so, the IMF’s Flexible System of Global Models (FSGM), a multicountry semi-structural model calibrated for the LAC economies, is used.

Trade and Financial Spillovers

Trade spillovers have been limited since 2017 as exports to Venezuela had already declined to less than 1 percent of total exports in most LAC countries during this period (Figure 11). Exports to Venezuela fell sharply in 2015–16 in Argentina, Brazil, Colombia, Ecuador, Peru, and Uruguay, reflecting the collapse in Venezuela’s domestic demand and the sharp decline in oil prices (Chapter 1). Going forward, trade with Venezuela and related spillovers are expected to remain subdued given the projected modest recovery of economic activity in Venezuela.

Figure 11.
Figure 11.

LAC: Exports to Venezuela

(Percent of total exports)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: IMF’s Direction of Trade Statistics; and IMF staff estimates.

Financial spillovers have also been limited, with some exceptions. Episodes of financial stress in Venezuela (increases in sovereign risk premiums and declines in stock prices following episodes of default) did not impact other LAC countries. Likewise, cross-border banking exposures have been limited as regional banks have little exposure to Venezuela and the presence of Venezuelan banks abroad is scarce. There were some financial spillovers for countries that participated in Venezuela’s energy cooperation agreements.24 Under these agreements, which started in 2005 and ended in 2018, Venezuela sold oil to beneficiary countries at market prices while providing generous financing conditions. According to the IMF 2014 Spillover Report, the total financing provided through these agreements amounted to 1.5 percent of the beneficiary countries’ GDP per year on average in 2012, and as much as 3 to 7 percent in some cases. Cheasty (2015) and McIntyre and others (2016) note that after the fall in oil prices in 2014–15, some of the countries that relied on these agreements to finance budget or quasi-fiscal activities, lost about 0.8 percent of GDP in funds.

Migration Spillovers: Impact on Economic Activity

Past studies have investigated the macroeconomic impact of migration through a variety of channels. While most studies have focused on the impact of migration on the labor market (Chapter 2), there is also ample evidence on the impact of migration on growth. However, most of these studies have examined the impact of economic migrants instead of refugees. Furthermore, most studies have focused on the effects in advanced economies, with scant evidence on the impact of migration on emerging market or developing countries (Böhme and Kups 2017). Most studies for advanced economies find a positive impact of migration on GDP, income per capita, productivity, and export performance.

Aiyar and others (2016) study the impact of the surge in refugees in Europe in 2015, estimated at about 0.15 percent of the local population. They find a minimal short-term impact on GDP due to the slow integration of refugees into the labor market and a minor rise in fiscal expenditure of 0.1 percent of GDP due to the provision of assistance to migrants. The impact on growth over the long-term is larger, estimated at 0.25 percent. Noja and others (2018) also find a positive impact of refugee migrants on economic activity in the EU countries, though they note that the impact of asylum seekers/refugees is lower than that of economic migrants.

Alesina, Harnoss, and Rapoport (2016) collect migration data for 195 countries and construct an index of population diversity, which they used to study the impact of migration. They find that diversity of skilled migration increases income and total factor producitivyt (TFP) per capita (and patent intensity). This is partly driven by skilled migration into advanced economies, where a 1 percentage point rise in the diversity of skilled migration raises long-term economic output by about 2 percentage points. The impact of unskilled migration is smaller. Ortega and Peri (2014), using a sample of 188 countries, also find a positive effect of openness to migration on per capita income. A 10 percentage point difference in the share of foreign-born population is associated with differences in income per person by a factor between 2.3 and 2.7.

Jaumotte, Koloskova, and Saxena (2016) find a large impact of migration on income per capita, especially in the long term. A 1 percent rise in the share of migrants in the adult population raises GDP per capita by up to 2 percent in the long term. Both high- and low-skilled migrants contribute and the gains from migration are broadly shared. Manole, Panoiu, and Paunescu (2017) find that migration increases productivity through innovation and complementarities, leading to higher income per capita: increasing the number of migrants by 100,000 increase GDP per capita in the receiving country by 0.84 percent.

Other studies focus on the impact of migration on innovation and exports. Hunt and Gauthier-Loiselle (2010) argue that income per capita could rise through the impact of migration on innovation. Using panel data, they show that a 1 percent increase in college educated migrants leads to a 15 percent rise in per capita patents. Likewise, Peri (2012), finds that a 1 percent increase in migrant employment leads to a rise in income per worker of 0.5 percent, driven by increased efficiency in task specialization (which raises TFP) and by the adoption of unskilled-biased technology. Wright (2014) and Ottaviano, Peri, and Wright (2015) show that migration not only enhances productivity in the sectors receiving the migrant workers, but also supports exports. Bahar, Cowgill, and Guzman (2022), using data on Venezuelan migrants in Colombia, find that providing undocumented immigrants with an immigration amnesty, increases their economic activity in the form of higher entrepreneurship.

Genç (2014) finds a causal positive relationship between migration and international trade. A 10 percent increase in the stock of migrants boosts trade by 1.5 percent. The main reason for this effect is that migrants reduce transaction costs for trade as they have superior knowledge of home country markets, language, customs, and business practices. Similarly, Burchardi, Chaney, and Hassan (2019) suggest that migrants can bring foreign direct investment (FDI) from their home country into their adopted country. Examining US state data, they find that a doubling in the number of individuals with ancestry from a given origin country increases the probability that at least one firm from that US state engages in FDI with that country of origin.

Migration tends to boost the public finances over the medium term. Previous studies have found a net positive impact of migration on public finances, including Storesletten (2003) for Sweden, Chojnicki (2013) for France, Dustmann and Frattini (2014) for the United Kingdom, Orrenius (2017) for the United States, and OECD (2013) for advanced economies. Valencia and others (2020), for the case of Venezuelan migrants in Colombia, find that higher fiscal spending to address migration deteriorates the fiscal balance in the near term, but higher output, consumption, and employment result in higher tax revenues with the public finances improving over the medium term.

Growth Spillovers: A Partial Equilibrium Approach

The starting point for analyzing the impact of migration flows from Venezuela on output in the recipient countries is a production function. This uses information on capital, labor, and productivity to estimate the impact of each component on GDP. More specifically, the following production function is used:

Y = AKαL(1–α)          (1)

where Y is GDP, A is total factor productivity (TFP), K is capital, L is labor, and 1-a is the share of labor in national income. GDP growth is decomposed into the contributions from growth in productivity (Δln(A)), capital (αΔln(K)), and labor ((1-α)Δln(L)). K and a are taken from the Penn World Tables. L is measured as total hours worked (employment times average hours worked per worker) and is adjusted by human capital using the index in the Penn World Tables. TFP is estimated as the residual and includes misallocation effects as migrants do not find jobs in line with their human capital in the short term (Chapter 2). The characteristics of the Venezuelan migrants are based on data for Chile, Colombia, and Peru, which are extrapolated to other LAC countries. The Colombian data also has information on migrants’ jobs and education level, which is extrapolated to other LAC countries to proxy for labor market mismatches.

Two scenarios are considered relative to a baseline without migration. The frictionless one assumes that all migrants looking for a job find a job in line with their human capital and without displacing local workers. In this scenario, investment increases, but real wages and the capital/labor ratio decline reflecting the large inflows of migrant labor. Total factor productivity remains unchanged from the baseline. As a result, output increases significantly in the years of sizable immigration flows as both labor and capital increase. Thus, this scenario provides an upper bound of the impact of Venezuelan migration on GDP.

The second scenario allows for more realistic labor market frictions based on the findings in Chapter 2. A number of assumptions are made. First, it is assumed that not all migrants are able to find a job initially and that the unemployment rate of each migrant wave temporarily exceeds that of the local population.25 This difference dissipates after 10 years. Second, the unemployment rate for migrants is assumed to be higher the larger is the ratio of migrants to the local population, as the labor market is not able to fully absorb a large inflow of migrants. Third, as observed in the data for Colombia, it is assumed that migrants do not displace local workers. Fourth, consistent with the labor misallocation effects documented in Chapter 2, migrants that find a job are assumed to find only a low-skilled job in the first year, moving to jobs in line with their human capital gradually over the next 10 years. As the human capital index in the production function reflects the years of schooling, the mismatch between the migrants’ human capital and the skills required in their jobs translates into a lower TFP. Finally, migrants do not increase TFP other than through their impact on human capital. Investment increases less than in the first scenario as some low skill jobs replace capital. The rise in economic activity due to migration in this scenario is lower and more protracted.

The results are presented in Figure 12. The left panel shows the average increase in growth between 2017 and 2030 for the two scenarios for a selected group of countries, showing that the impact would be larger and more frontloaded if migrants can quickly find jobs in line with their human capital. Migration from Venezuela would increase annual GDP growth in recipient countries between 2017 and 2030 by 0.01 to 0.3 percentage points in the frictionless scenario, compared to 0.01 to 0.25 percentage points in the scenario with frictions.

Figure 12.
Figure 12.

Growth Accounting Results

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Source: IMF staff calculations

Figure 12, panel 2, decomposes the impact on GDP growth in the scenario with frictions into the contributions from labor, capital, and TFP. It shows that the key factor explaining the rise in GDP growth is the increase in labor, including both the number of migrants and their human capital. The increase in effective labor accounts for about 70 percent of the increase in GDP growth on average, with capital explaining the rest. These effects are partly offset by a decline in TFP driven by the fact that many migrants join the informal sector and evidence of significant skills mismatches. These frictions are expected to ease over the medium-term as migrants are fully absorbed into the labor market and new migrant flows recede.

Figure 12 focus on the LAC countries that have received the largest migration flows. Although countries in the Caribbean have received smaller migration flows, they represent a much larger share of the domestic population in some cases, accounting for 16 percent in Aruba, 27 percent in Bonaire, and 9 percent in Curacao in 2022. These shares are larger than in Chile, Colombia, Ecuador, and Peru, where they range between 2.5 and 5 percent in 2022. The average increase in growth in Aruba, Bonaire, and Curacao is estimated at 0.7 percent. However, it is unclear whether the labor markets of these countries would be able to fully absorb these large migration flows and thus reap the full benefits in terms of output growth.

Sensitivity Analysis

The estimates presented so far are based on the baseline projection that 8.4 million migrants would have left Venezuela by 2025. As there is considerable uncertainty about the migration outlook, sensitivity analysis is presented through a lower bound scenario in which the number of migrants reaches only 7.4 million in 2025 (Figure 13). The impact on growth for the alternative scenario is estimated assuming the same frictions for the absorption of migrants into the labor market as above. The impact of Venezuelan migration on growth is sizeable even in the low scenario, with growth increasing by between 0.01 and 0.21 percent.

Figure 13.
Figure 13.

Sensitivity Analysis: Growth Impact from Venezuelan Migration with Frictions

(Percent, 2017–30 average)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Source: Fund staff calculations.

Fiscal Implications and Spillovers

Another effect of migration is its impact on the fiscal balance. Recipient countries provide support to migrants such as humanitarian aid, basic health care, education, accommodation, and labor market policies (Chapter 4), which increase overall public expenditure. While data on migration-related public expenditure by country is not available, there is detailed data for Colombia. Table 1 presents the detailed composition of migrant related public expenditure (total and per migrant) in 2019 expressed in US dollars.

Table 1.

Estimates of Near-Term Fiscal Cost of Venezuelan Migration

article image
Source: Colombian authorities.
  • The largest item is education, including preschool, primary, and secondary education, and costs associated with the school feeding program and transportation, but it excludes tertiary education costs.

  • The second largest item is health care, including the average annual payments per-patient enrolled in the mandatory health plan of the subsidized regime, average emergency room costs per-patient without public health insurance, vaccinations, and other public health costs. For early childhood care, the cost is based on the average cost of early childhood care for the domestic population. Humanitarian assistance includes costs of providing temporary housing and cleaning and cooking appliances, feeding, medical and psychological emergency care, and emergency transportation.

Using the Colombian fiscal costs as a benchmark, public spending is extrapolated to other countries based on the size and characteristics of their migrant population, with some adjustments. These adjustments recognize that Colombia provides some services (for example, immediate humanitarian assistance, vaccinations, or childbirth to arriving mothers) that other countries do not need to provide. The cost per migrant in 2019 is assumed to remain unchanged in real terms between 2017 and 2025.26

Due to the sizeable and persistent migration shock, the estimates of the fiscal costs are large and extend beyond the short term. The baseline estimates show costs peaking at 0.5 percent of GDP in Colombia in 2019 and remaining elevated at 0.4 percent between 2020 and 2025, 0.25 percent in Ecuador and Peru, and 0.1 percent in Chile (Figure 14). The impact on the fiscal balance is expected to dissipate over time as tax revenues rise in line with the expansion in economic activity as migrants integrate into the labor market. These dynamics are examined in the next subsection.

Figure 14.
Figure 14.

Estimated Fiscal Costs

(Percent of GDP)

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Source: IMF staff estimates.

General Equilibrium Approach

A general equilibrium approach is used to study the impact of migration from Venezuela on output, the labor market, and the fiscal and external accounts. This section uses Western Hemisphere Department Model (WHDMOD), a model that is part of the IMF Flexible System of Global Models (FSGM).27 In the simulations, the direct effects of migration are captured through three simultaneous shocks.28 The first shock reduces the size of the population and labor force in Venezuela, while the second shock increases the population and labor force in the countries that receive the migrants. The final shock captures the human capital characteristics of the migrating labor as documented in Chapter 2. These three shocks correspond to the shocks in the frictionless scenario discussed in the growth accounting section.

The indirect effects of migration are captured with three additional shocks. The first one considers the misallocation of migrants, as migrants do not initially get jobs in line with their qualifications. The second indirect shock adjusts for higher unemployment effects from migration as migrants have higher unemployment rates than locals. These two shocks plus the direct effect shocks, are equivalent to the scenario with frictions above. The third indirect shock captures the fiscal costs of assisting migrants as discussed in the previous section. The simulations assume that the additional public expenditure is financed with public debt instead of expenditure cuts or tax increases. The model is simulated for the period 2017–30 using actual migration flows in 2017–21 and the baseline projections for 2022–30, which assume that 8.4 million migrants would have left Venezuela by 2025, with no additional migration after 2025 and no migrants returning to Venezuela.

Transmission Channels of the Migration Shock

As in the partial equilibrium analysis, the impact of the migration flows on GDP is positive and sizeable for some countries. The magnitude of the effect depends on the size of the migration flow relative to the local population, the migrants’ human capital, and the degree of misallocation in the labor market.

In the simulations, the arrival of working-age migrants increases labor supply and potential output. The latter also increases because the migrants’ human capital appears to be higher than that of the domestic population in some countries (Chapter 2). Regarding labor, the model considers the employment rate and the extent of misallocation as migrants do not find jobs in line with their skills initially. Still, migration flows from Venezuela raise potential output in all receiving countries even after considering misallocation and higher unemployment rates of migrants relative to the local population.

Migration has important labor market implications from the supply side. As most migrants find a job (even if this job does not correspond to the migrants’ skills), total employment increases, and real wages decline. Lower real wages discourage the participation of some domestic workers in the labor market, while overall unemployment increases slightly as the unemployment rate of migrants exceeds that of the domestic workers. Despite these effects, overall labor income rises in line with the increase in overall employment. For firms, lower real wages result in lower production costs and higher profits.

Migration also has aggregate demand effects. The arrival of migrants boosts household consumption. The return to investment rises in line with the increase in effective labor, boosting private investment. The influx of migrants also increases migration-related public expenditure and transfers, as documented in a later section, further boosting domestic demand. The initial increase in the fiscal deficit dissipates over time as tax revenues gradually increase in line with the increase in consumption, corporate and labor income tax revenues.

The increase in domestic demand leads to a rise in imports. While production expands in line with higher employment and investment, not all of it is exported. The rise in imports exceeds the increase in exports, and the trade balance deteriorates. The deterioration of the trade balance also worsens the income and the current account balances. To restore the external equilibrium, the exchange rate depreciates.

As the rise in output differs from the rise in potential output across countries, so does the output gap. The impact on the output gap depends on the number of migrants (a higher number relative to the local population leads to a more negative output gap), their characteristics (higher human capital of migrants relative to the local population leads to a negative output gap), unemployment frictions (the higher the number of migrants, the higher is the unemployment rate and the more negative the output gap), misallocation (a higher mismatch results in a positive output gap), and fiscal costs (higher fiscal costs lead to a more positive output gap). Inflation and the monetary policy response in the model depend on the output gap.

Magnitude of the Effects across Countries

Migration flows from Venezuela results in a significant increase in GDP in some countries. Figure 15 presents the simulation results for the five LAC countries that have received the largest migration flows (Brazil, Chile, Colombia, Ecuador, Peru), while Figure 16 shows the results for a selected group that have received smaller migrant flows, but large relative to their population (Costa Rica, Dominican Republic, Panama, Uruguay). The variables plotted are GDP, employment, the real wage, private consumption, private investment, the current account balance, the fiscal balance, core inflation, the real exchange rate, and the policy rate.

Figure 15.
Figure 15.

Impact of Venezuelan Migration on the Largest Recipient Countries

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Flexible System of Global Models (FSGM) simulations; and IMF staff calculations.
Figure 16.
Figure 16.

Impact of Venezuelan Migration on Other Countries

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Flexible System of Global Models (FSGM) simulations; and IMF staff calculations.

Peru has the largest increase in GDP by 2030 (4.4 percent), followed by Colombia (3.7 percent), Ecuador (3.5 percent), and Chile (2.6 percent). The impact on Brazil is small, reflecting the small size of the migration flows relative to its population. The impact on other countries is also sizeable, with the largest effect on Panama (1.9 percent), followed by the Dominican Republic (1.1 percent), and Costa Rica and Uruguay (0.6 percent). These effects are largely driven by the expansion in employment. Real wages fall in all countries, with the magnitude depending on the size and characteristics of the migration flow and the flexibility of the exchange rate. This is why the fall in the real wage is smaller in Peru than in Colombia despite a larger increase in employment, while in Ecuador the fall in nominal wages is largely offset by the decline in the price level. The increase in GDP in Colombia is like that of Peru despite having larger migration flows. This is due to the lower human capital and higher unemployment of migrants in Colombia, which also increase investment more in Peru than in Colombia.

The impact on the fiscal deficit is large and persistent, largely driven by the costs of assisting migrants. The net fiscal costs are largest in Colombia, followed by Ecuador and Peru. The impact on the current account deficit mirrors the impact on the fiscal deficit but is also due to higher private consumption and investment, which has a high import content. In Ecuador, the fixed exchange rate worsens the current account deficit as the real exchange rate depreciates less, dampening exports and boosting imports.

The impact on inflation and the response of monetary policy are driven by the output gap. In Colombia, the migrant’s lower human capital and higher unemployment rates, and labor market frictions mitigate the impact of the increase in labor on the output gap. This together with the fiscal costs of assisting migrants results in a small positive output gap. A similar pattern is observed for Peru. In Chile, the higher human capital of migrants relative to the domestic population results in a negative output gap. In Ecuador, with a fixed nominal exchange rate, the nominal adjustment occurs through prices thereby resulting in lower core inflation.

Sensitivity Analysis

To complement the results shown thus far, sensitivity analysis for a selected set of variables based on the two migration scenarios discussed in Chapter 1 is presented (Figure 17). Relative to the baseline scenario, GDP is projected to be 0.3 percent lower under the alternative migration scenario on average. On the other hand, differences in the current account and fiscal deficits are more muted. In line with previous findings, and reflecting the size of migration flows, the effects are generally larger for Chile, Colombia, Ecuador, and Peru.

Figure 17.
Figure 17.

Sensitivity Analysis of Macroeconomic Impact of Venezuelan Migration

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Sources: Flexible System of Global Models (FSGM) simulations; and IMF staff calculations.

Conclusion

The macroeconomic effects of migration from Venezuela are substantial in some recipient countries through both supply and demand side effects. The partial and the general equilibrium approaches used to assess the macroeconomic effects of migration from Venezuela on the LAC region show that growth in the LAC countries that have received the largest migrant flows would increase by between 0.10 and 0.25 percent per year on average between 2017–30. The general equilibrium approach, which also considers the impact of migration on private demand and the fiscal sector as well as dynamic effects, finds that the increase in growth is largely driven by the increase in employment and investment. The migration shock also results in a fall in real wages and a widening of the current account and fiscal deficits. The latter moderate as the migration shock dissipates. Finally, given the uncertainty around the migration projections, sensitivity analysis is presented for an alternative migration scenario, showing that the macroeconomic effects of migration on recipient countries are sizeable even in a lower migration scenario.

4. Policy Responses and Recommendations

The policy response to migration from Venezuela has evolved over time. Countries in LAC initially welcomed migrants fleeing the crisis by signing of 2018 Quito agreement.29 Flexible immigration policies at the border granted access and assistance—including through waivers, mobility cards, temporary permits, or permanent status. Countries also provided humanitarian assistance and access to social services, including health care, childcare, and education. However, countries modified their policies as migration flows surged in 2018–19, with some providing additional support and others imposing barriers. A central theme for policies is how to best manage the costs of adjustment while taking advantage of the benefits of migration. Employment policies have helped migrants to regularize their status and find jobs, but only a few countries have adopted active labor market policies to deepen integration. In this regard, the policy priorities to raise potential growth going forward include formalizing migrant workers, promoting job search, and facilitating labor market adjustment, while managing attendant fiscal costs and strengthening international cooperation.

Taking Stock of Migration-Related Policies

This chapter takes stock of policies implemented in LAC countries to support and integrate Venezuelan migrants. Specifically, it provides a framework and tracks the evolution of policies related to immigration, humanitarian assistance, the provision of other public services, and domestic labor market policies. Drawing on this experience, the chapter then discusses policy priorities going forward.

Inward migration is a relatively new phenomenon in LAC, which poses significant public policy and institutional design challenges. Within the context of limited fiscal space and potential tensions from anti-migrant sentiment,30 a central task for policymakers in recipient countries is to pursue policies that raise the economic welfare for both migrants and local citizens when adjusting to these migrant inflows. A useful typology of public policies to deal with migrants can be characterized by three broad categories: (1) immigration policies related to intake and settlement; (2) provision of social services, including humanitarian assistance, health care, and education; and (3) labor market policies to facilitate employment.

Early in the migration wave, regional partners welcomed Venezuelan migrants and provided extensive support by placing relatively few impediments to settlement in their countries. This support included visa waivers, mobility cards, and the provision of humanitarian assistance and social services, including health care, education, and childcare. Assistance was also given to integrate migrants into the labor market by granting work permits or recognizing work credentials. However, this support was temporary and there has been little role for active labor market policies to deepen the integration of migrants. As the migration flows intensified in 2018–19, countries shifted their policies, some to provide more support and other to erect barriers to migration.

The debate on migration policies in LAC eased in 2020 as the COVID-19 pandemic disrupted migration flows and closed borders. But this debate is likely to reemerge now that borders have reopened and migration has resumed. This debate will take place in a context still high unemployment, a slow economic recovery, and limited fiscal space, with migrants being in a particularly vulnerable position.31 Both the renewed migrant flows and the need to integrate migrants already present in recipient countries, highlight the importance of learning from past actions to improve current migration-related policies and integration efforts.

Entry at the Border—Immigration Policies

Before the crisis, many LAC countries had a flexible immigration policy with Venezuela. Two decades of integration efforts through sub regional groups such as Mercosur—Southern Common Market, the Andean Community, CARICOM—Caribbean Community, UNASUR—Union of South American Nations, and other bilateral arrangements had resulted in no visa or passport requirements for Venezuelan entry into neighboring countries. At end-2015, Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay did not require a visa for Venezuelans to enter the country. Of these, Argentina, Brazil, Ecuador, Peru, and Uruguay did not even require a passport, which made them very attractive destinations when the issuance of Venezuelan passports became more difficult.

As the migrant flows grew, several countries introduced new documentation requirements (Figure 18). These restrictions were introduced despite the 2018 Quito agreement. By end-2019, Chile, Ecuador, and Peru had introduced new visa requirements for Venezuelans, with the latter two now also requiring passports.32 Other countries also adopted more restrictive policies. Panama introduced new visa requirements in 2017, the Dominican Republic, Guatemala, Honduras, and Trinidad and Tobago in 2019, Nicaragua and Aruba in 2021, and Costa Rica and Mexico in 2022 (Table 2). In countries with large landcrossing migrant flows from Venezuela (Brazil, Chile, Colombia, Ecuador, Peru) the authorities also increased the number of border posts and migration officials.

Figure 18.
Figure 18.

Number of Countries Requesting a Visa to Venezuelans

Citation: Departmental Papers 2022, 019; 10.5089/9798400224478.087.A001

Source: IMF staff elaboration.
Table 2.

Number of Countries Requesting Visas to Venezuelan Citizens

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Source: IMF staff elaboration.

In 2020, due to the pandemic, most borders were closed.

Border was closed since 2019.

Chile introduced “Democratic Responsibility Visas” in 2018.

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Acknowledging the challenges to obtain appropriate traveling documents in Venezuela, some countries have recently eased immigration requirements.

  • Argentina, Brazil, Chile, Colombia, and Peru started accepting expired passports for Venezuelan migrants as valid identification documents as the issuance of passports in Venezuela became difficult and the costs of obtaining a new passport rose significantly.33

  • In some cases, immigration policies were further relaxed by regularizing migrants that did not have a legal status in the country (“irregular” migrants) and/or easing immigration requirements to enter the country. For example, Colombia launched mobility cards (not requiring passports) to allow Venezuelans to cross the border to obtain basic goods and services,34 and Special Permanence Permits (PEPs) that provide time-limited resident status (two years in most cases).35 In March 2021, Colombia committed to regularize the migrant population from Venezuela through the Temporary Protection Statute (ETPV). The ETPV is made up of the Unique Registry of Venezuelan Migrants (RUMV) and the Temporary Protection Status (PPT). The PPT is the identification and regularization document that will allow Venezuelans to access rights, services, and integration opportunities for 10 years, while they acquire a resident visa (Box 1).36

Colombia: Implementation of the Temporary Protection Status1

Colombia’s initial response to the Venezuelan migration crisis, as noted in CONPES 3950 of 2018, aimed to support migrants in the areas of health, education, early childhood, childhood, adolescence and youth, water, housing and basic sanitation, and labor inclusion; over a period of three years. It also sought to help the integration of migrants through regularization and socialization as reflected in the Development National Plan 2018–22, which envisaged the adoption of a comprehensive long-term strategy, not only for the management and care of migratory flow, but also for the economic and social integration of migrants and returning Colombians. Against this backdrop, the government introduced the Permiso Especial de Permanencia (PEP visa), which granted full access to Colombian formal markets and safety nets to irregular migrants. In 2021, Colombia introduced the Temporary Protection Status (ETPV) to protect existing irregular migrants, discourage new irregular migration, and allow the transition of migrants from a temporary protection regime to an ordinary immigration regime.

Validity and Beneficiaries

The ETPV will be valid for 10 years and will be aimed at Venezuelan migrants who are in Colombia on a regular status, either because they have an entry permit and permanence, extended the permanence, or have a PEP. Venezuelan migrants seeking refuge and holders of an SC-2 safe-conduct will also qualify, as well as irregular Venezuelan migrants who can demonstrate they were in Colombia on January 31, 2021. To discourage irregular migration, only those Venezuelan migrants who enter Colombia regularly during the first two years of validity of the ETPV will benefit from it.

Structure

The ETPV has two legal tools, the single registry of Venezuelan migrants under temporary protection regime and the temporary protection permit (PPT). These tools will be implemented in two phases, first by creating a single registry of Venezuelan migrants that is part of the identification and registry project of Venezuelan citizens and second, by issuing PPT, a migratory regularization and identification document that allows the exercise of any legal activity or occupation. It also allows migrants to prove their permanence in Colombia for the purpose of accumulating the time required to apply for a resident visa. This benefit also applies to valid PEP holders on the effective date. After its first year of implementation, 2.2 million Venezuelans have applied to the ETPV, of whom more than half have been authorized.

1 Source: Decree 216 of 2021, Migration Colombia.
  • Regularization processes of Venezuelan migrants have been implemented in many LAC countries to varying degrees (Table 3, Annex 1). Argentina and Uruguay have maintained lax immigration requirements and open paths to legal permanent residency. Brazil has made temporary residence permits available to any Venezuelan who enters the country if they have some type of identity document (Selee and Bolter 2020), while the Dominican Republic, Ecuador, and Trinidad and Tobago have provided temporary residence permits only to migrants that entered legally. Peru has implemented both. During 2017–18, it adopted a Temporary Stay Permit (PTP) that gave one year of residency to Venezuelans who entered legally, and in 2020, a Temporary Stay Permit Card (CPP) for one year including to those migrants whose temporary residency had expired and that had entered the country irregularly.

  • Mexico and several Central American countries have applied existent migration regularization frameworks rather than specific ones for Venezuelan migrants (Annex 1). A key element that distinguishes this region is that these countries play the role of origin, destination, and/or transit of Venezuelan migrants.

Table 3.

Mechanisms for the Registration and/or Regularization of Venezuelan Migrants

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Source: IMF staff elaboration.

One of the PEP rounds covered Venezuelans who had entered the country irregularly as long as they had subsequently registered registered with the government between April and June 2018.

Not specific for Venezuelans. Mechanism designed for migrants working in the agricultural sector.

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Another path to migrant regularization has been through asylum systems. Most countries that signed the 1951 UN Refugee Convention have given various forms of assistance, but only some have granted asylum status to a significant number of migrants. The countries receiving the largest number of refugee requests in the region have been Brazil and Peru.37 Successful asylum claims remain much smaller in the rest of countries, with applications often overwhelming existing processing systems.

Humanitarian Aid and Social Assistance

Most LAC countries have provided assistance to Venezuelan migrants irrespective of whether migrants have asked for asylum or not. Most have helped vulnerable groups such as children, women, and the elderly. Venezuela’s immediate neighbors (Brazil, Colombia, Guyana) have provided basic medical assistance such as vaccinations, nutrition, and childbirth. Medical services have also been provided at the border in Chile, Ecuador, and Peru and for migrants crossing on foot. Panama has provided health services, temporary housing, and food, while Mexico has provided food, medical services, legal advice, and access to education. In Honduras, migrants have received food and medical checkups, in coordination with the International Red Cross. Canada and the United States have provided funding for this humanitarian aid.

Once in the country, however, migrants have faced challenges accessing health systems. In countries with universal healthcare (Argentina, Ecuador, Guyana, Trinidad and Tobago), health care systems are open to migrants, but resource constraints make it difficult in practice. Other countries have mixed health care system wherein migrants can access basic services but face legal barriers to access other services. In Colombia, the health care system consists of a basic free public system that provides vaccinations, prenatal care, and emergency care, which migrants can access at no cost. For additional services, Colombians access subsidized or contributary public health insurance, which is also available for Venezuelan migrants in regular status (including PEP and TPS holders) but not for migrants in irregular status.

Peru also has a mixed health care system with contributory and subsidized public insurance schemes. However, only people with identity documents issued by the Peruvian government are allowed to access these systems. This excludes both irregular migrants and Temporary Permanence Permit holders, although many of them have access to basic programs aimed at vulnerable migrant populations (for example, pregnant women, children younger than five). This strategy has also been adopted in other countries, where limited alternative services are provided to migrants in lieu a full integration to the local health care systems. As an additional limited safety net, LAC countries have coordinated with international agencies (for example, UN agencies, Red Cross International, Doctors without Borders) to provide additional basic service coverage to Venezuelan migrants.

In Brazil, all people can access health services regardless of their immigration status, but with some limitations. To access health services, it is necessary to have an identification document to prove the person’s identity. In Chile, the Migration Law states that resident foreigners or foreigners with irregular migratory status will have access to health care on the same terms as nationals. In the Dominican Republic, Nicaragua, and Panama, migrants also have access to public health services (Table 3, Annex 2).

The provision of social benefits, in most cases, is limited to migrants that have a legal migratory status. Some exceptions include Brazil where the right of access to social benefits is a universal right protected by the Constitution and applies to all people within the Brazilian territory regardless of their immigration status. For instance, migrants have the right to basic social assistance, such as Bolsa Familia and Auxilio Brasil.

COVID-19 Response

Vaccination against COVID-19 in LAC has covered Venezuelan migrants irrespective of their migratory status.38 Venezuelan migrants have also received pandemic-related transfers in some countries. In Colombia, migrants holding a PEP or TPS were eligible for the Solidarity Income Program to mitigate the impact of the pandemic. In Brazil, Venezuelan migrants benefited from emergency relief from the federal government. In Costa Rica, migrants in regular migratory status that had a valid migratory identity document, a valid work permit, and an international bank account number (IBAN) bank were eligible for the Bono Proteger, which provided temporary subsidies to people who were laid off or experienced reduced working hours during the pandemic.39 In Panama, migrants were included in the state’s responses to the COVID-19 pandemic and in the Panama Solidarity Plan.

Education Policies

Most LAC countries provide universal access to education and cover migrants regardless of their status (Table 3, Annex 2).40 Colombia, with the largest recipient of school-age Venezuelan migrants, allows them to enroll without documentation and without providing apostilled copies of school records. Placement exams are used for accreditation instead. Ecuador has a similar system. In Peru, migrants must validate their primary or secondary school records to access local schools, which is a significant barrier for many of them.41 Even when the proper documentation is provided, countries face school capacity constraints and lack of funds for additional teachers and meals. Aruba, Brazil, and Guyana, where Spanish is not spoken, provide language assistance.

Employment—Labor Market Policies

LAC countries have implemented various strategies and programs to regularize migrants and help their integration into the labor market. As noted in Chapter 3, these policies can be instrumental in expanding the workforce, human capital, and the productive capacity of the economy.

For asylum seekers, access to the local labor market should be granted under international agreements for Venezuelan migrants, but this is not always the case. For example, Trinidad and Tobago does not issue work permits to refugees under UNHCR due to lack of a recognition system, while other countries do not allow asylum seekers to get a work permit while applying for asylum. On the other hand, Costa Rica and Panama allow asylum seekers to get a work permits when applying for asylum. More generally, the share of Venezuelan migrants applying for refugee status is small (15 percent).

For non-asylum seekers, countries have tried to regularize irregular migrants or introduce visas that allows them to work. Chile, Colombia, Peru, and Trinidad and Tobago introduced renewable temporary work permits, lasting between six months and two years, which have allowed many migrants to obtain legal work status.42 These programs have been helpful to regularize many migrants and open the door to formal employment. However, they are not open to all migrants due to a variety of legal requirements, which in some cases have become stricter. For example, Chile stopped allowing migrants who entered on tourist visas to transition to a status that allows them to work.

Table 4.

Provision of Social Services to Venezuelan Migrants.

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Source: IMF staff elaboration.

Migrants have the right to basic social assistance (like Bolsa Familia/Auxilio Brasil).

Regarding education services, children cannot graduate from high school (eleventh grade) if they are in irregular status.

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Colombia introduced the Special Stay Permit in 2020, allowing Venezuelans that have an offer of formal employment to receive a temporary work permit for the length of their contract (Selee and Bolter 2020). Moreover, the EPTV implemented in 2021 provides qualifying migrants the right to work in any legal activity or occupation. In Brazil, migrants with temporary residence, asylum seekers, and refugees can apply to Carteira de Trabalho (CdT), which guarantees access to labor rights provided for by law. Costa Rica is regularizing migrants with roots in the country and those working in the agricultural sector, including with the “Labor Traceability” card (known as SITLAM) that proves the temporary legal permanence in the country and guarantees labor rights such as payment of the minimum wage and overtime, as well as other benefits.

Countries have also introduced programs to validate migrants’ skills and degrees. As noted in Chapter 2, high costs and long waiting times related to the recognition of degrees, accreditations by national professional associations, and apostilled documents requirements have induced educated migrants to seek low-paying jobs in the informal sector. Some countries have launched programs to accelerate these processes. In Peru, municipalities offer courses in their Productive Technical Centers to allow migrants to obtain certification for existing skills. Similar programs exist in Colombia through its National Learning Service Agency (SENA). Uruguay has implemented institutional reforms to decentralize and expedite the validation of foreign degrees, while Ecuador and Argentina have implemented fast-track credential recognition systems.

Active labor market policies have also been introduced given that some migrants take time to integrate into the labor market even when legally authorized to do so. This includes facilitating internal migration by reallocating assistance to cities where there are labor shortages. In 2018, Brazil implemented “Operation Welcome” (“Operacao Acolhida”) to integrate arriving Venezuelans by sending them to other parts of the country (other than Roraima and Manaus, the main arrival centers). A goal of this system is to better integrate migrants in the Brazilian labor market, given reduced opportunities in arrival cities. Language training has also been provided in countries where Spanish is not the first language (Aruba, Brazil, Guyana). The use of other active labor policies, such as the active job-search assistance provided in Europe, has been more limited.43

Policies for Past Migrants and Future Waves

LAC countries will need to redouble their efforts to integrate the migrants into their labor markets going forward. As noted in Chapter 1, migration from Venezuela has resumed after a brief interruption during the COVID-19 pandemic and is expected to continue in the coming years. In addition, many LAC countries have large numbers of migrants from previous waves that have not been fully integrated in the domestic labor market. Countries in the region should continue providing immigration, health, and education benefits to migrants, and should strengthen their efforts to integrate migrants into the formal labor market to reap the economic gains from migration. International evidence shows that policies supporting the integration of migrants into the labor market and society have yielded positive results in the countries that implemented them.44

Building on Existing Policies

The first pillars to build on are regularization and transitional arrangements. For migrants who entered the borders under regular status, permanent residence pathways, such as those offered by Argentina and Uruguay, are the most appropriate and should be expanded in other countries in the spirit of the Quito agreement. These paths, however, do not cover the numerous migrants who have entered countries illegally or who, by necessity, have overstayed their temporary visas.45 For them, asylum systems, which remain largely underdeveloped, should be strengthened in accordance with commitments through international treaties, including the 1951 UN Refugee Convention and the 1984 Cartagena Declaration on Refugees.46

Alternatively, regularization programs like those implemented in Colombia, Ecuador, and Peru could be replicated in other countries. This includes accepting expired passports as legal identification documents and implementing targeted temporary residence programs for migrants.47 These permits can help integration and smooth the short-term impact of migration; however, they should be transitional. As it becomes clearer that many migrants will not be able to return to Venezuela in the future,48 temporary programs will expire and their renewal can overwhelm permit approval systems. In this context, the ETPV in Colombia provides an example of a long-term sustainable strategy, which not only complements transitional programs but further advanced the process of integration of migrants. Otherwise, permanent irregular migration, with its adverse effects on labor market formalization and social outcomes, could become a medium-term risk.

Health and education systems will need to transition from immediate emergency responses to economic and social integration. This will require enhancing the quality and coverage of education and health systems, which remain underdeveloped in many LAC countries, and easing the process to legally integrate migrants into the health and education systems, including irregular migrants. The authorities should communicate clearly which basic services are accessible to migrants in the public health systems and the paths to enrollment in the contributive social security schemes. Similarly, for education, enrollment requirements for migrants should be clarified and made more flexible to allow rapid enrollment of migrant children at the appropriate grade.

Labor Market Priorities

Reaping the economic gains from migration requires accelerating and strengthening labor market integration. Key dimensions include (1) expanding access to formal labor markets through more integrated approaches, (2) deepening active labor market policies including job search and labor protections, and (3) undertaking structural reforms more broadly that improve absorptive capacity of and adjustment in labor markets to the influx of new workers.

Formalizing migrant workers and easing access to the formal labor market would reduce misallocation. Access to work permits could be given early in the application for asylum, permanent residence, or temporary permanence permits. As in Colombia, an option to encourage formal employment is to tie residence permits to employment offers, which was also successful in Germany in the 1990s.49 Legislation discouraging legal migrant employment, such as limits on foreign employment at the firm-level, should be reformed.50 LAC countries should also accelerate the accreditation of skills and education to better use the migrants’ human capital. This requires removing rigidities and bottlenecks in existing accreditation systems (including those involving universities and professional associations), lowering fees and apostilled document requirements, making procedural information easily available, and certifying professional skills. Fast-track programs such as those in Argentina and Ecuador could serve as examples, as well as the skill certification programs in Colombia and Peru.

Active labor market policies should be strengthened, including those enhancing country wide mobility and job search assistance. This would enable migrants to move where employment opportunities are more abundant and help balance regional disparities in labor market conditions. Moreover, in non-Spanish-speaking countries, language training can be expanded to further facilitate economic integration. Labor rights protection policies should also be strengthened to prevent discrimination and exploitation of migrants.

Broader structural reforms are also needed, including those that increase flexibility of wages and hiring practices. These policies would help absorb the migrant influx and reduce unemployment and informality of both migrants and locals. Reducing firm start-up and non-wage labor costs is also a priority, which would help expand economic activity and employment.51 Going forward, structural reforms to improve labor mobility and reduce product market rigidities will help mitigate the scarring effects from the pandemic.

Managing Fiscal Implications

The policies discussed so far may carry large fiscal costs. Policy implementation will depend on available fiscal space and medium-term frameworks. Countries with ample fiscal space can finance the rise in spending related to the provision of education, health, and social assistance to migrants by issuing debt. Countries with limited fiscal space may seek help from donors and international institutions to support migrants. They can also finance higher migrant-related spending by enhancing the efficiency of other spending (reducing untargeted transfers, improving investment efficiency, using public-private partnerships), while avoiding cuts to needed infrastructure investment and well targeted social programs. On taxes, closing exemptions and loopholes can raise significant revenue without large economic or social costs. Countries should avoid increasing taxes that raise the cost of employment given large migration flows and the growing workforce. Countries should develop and implement standards and procedures that facilitate and simplify the migratory regularization of Venezuelan migrants and promote their integration in public employment services platforms, employment, self-employment and entrepreneurship (in line with the Quito Process VIII Join Statement, points 6 and 7).

The response to the migration from Venezuela requires strong coordination across multiple agencies and levels of government. A coordination body should be established to coordinate the national response, as in Colombia, where migration czar that responds directly to the President was appointed, or in Peru, where a special multisector commission was established. Strong centralized leadership and coordination would ensure an effective implementation of measures in a cost-effective manner.

Coordination at the international level is also key for an effective response to the Venezuelan migration crisis. Individual country actions toward migrants, such as entry restrictions at the border, can lead to larger than expected migrant flows top other countries in the region. In line with the 2018 Quito agreement, countries should negotiate a coordinated response to the migration crisis, in which each country contributes its fair share in the provision of employment and integration opportunities to migrants.

International cooperation is also key in coordinating humanitarian assistance. This includes coordinating resources for emergency humanitarian responses through multilateral organization and international donors,52 and sharing information on migrant flows, health, demographic characteristics, and response strategies. There are some good examples of coordination in health care. In 2019, 11 countries announced the introduction of a Uniform Vaccination Cards (TUVs) to reduce vaccine duplications while ensuring that all Venezuelan migrants were vaccinated.53 This now allows for more resource effective vaccination and tracking. Similarly coordinated strategies could be envisioned for the recognition of identification documentation and education degrees, and to homogenize the requirements to access health and education services. This coordination became even more important with the COVID-19 pandemic, where sharing testing and vaccination records is key. International coordination strategies can allow the region to share the costs and the benefits of full migrant integration.

Annex 1. Mechanisms for Registration and Regularization of Venezuelan Migrants

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Sources: Programas de Regularización y Facilidades Administrativas para las personas Refugiadas y Migrantes de Venezuela (R4V, 2022); An Uneven Welcome, Latin American and Caribbean Responses to Venezuelan and Nicaraguan Migration (Selee and Bolter, Migration Policy Institute, 2020); and Swissinfo.ch.Sources: “Regional study: Migratory regularization programmes and processes,” International Organization for Migration (2021).Sources: Programas de Regularización y Facilidades Administrativas para las personas Refugiadas y Migrantes de Venezuela (R4V, 2022); An Uneven Welcome, Latin American and Caribbean Responses to Venezuelan and Nicaraguan Migration (Selee and Bolter, Migration Policy Institute, 2020).

Annex 2. Provision of Social Assistance to Venezuelan Migrants

Annex Table 2.1.

Social Services

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Sources: Programas de Regularización y Facilidades Administrativas para las personas Refugiadas y Migrantes de Venezuela (R4V, 2022); An Uneven Welcome, Latin American and Caribbean Responses to Venezuelan and Nicaraguan Migration (Selee and Bolter, Migration Policy Institute, 2020);International Organization for Migration (IOM), 2021. Migration Governance Indicators Profile 2020 – The Eastern Republic of Uruguay. IOM. Geneva.International Organization for Migration (IOM), 2021. Migration Governance Indicators Profile 2021 – Republic of Paraguay. IOM, Geneva. International Organization for Migration (IOM), 2019. Migration Governance Indicators Profile 2019 – Panama. IOM, Geneva.International Organization for Migration (IOM), 2021. Migration Governance Indicators Profile 2021 – Republic of Nicaragua. IOM. Geneva

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