Transcript Peer Effects and Alcohol Use among College Students

International migration in Venezuela
and the Growth Collapse
Dan Levy
Visiting Assistant Professor, Kennedy School of Government, Harvard University
Dean Yang
Assistant Professor, Ford School, University of Michigan
Presentation at the Kennedy School of Government, April 2006
Two key objectives
I.
Characterize history of international
migration in Venezuela
II.
Assess link between migration and growth
collapse in Venezuela
Data

Encuesta de Hogares (1975-2003) : Semi-annual household
survey
 Allows us to get a history of number of foreign born
people and net flows

Key variables




Place of birth
Year of birth
Entrepreneur status
Limitations



Year of arrival to Venezuela only available for 1994-2003
Can only infer net flows
Entrepreneur status variable is relatively crude measure
I - History of International
Migration in Venezuela
Key questions

How has the stock of immigrants evolved over
time?

How has the composition of immigrants evolved
over time?

How do immigrants differ from natives in their:


Entrepreneurship
Human capital
Number of foreign-born living in Venezuela
Number of Foreign born
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1975
1980
1985
1990
Year
1995
2000
Foreign born as a percentage of total population
Percent of Foreign Born
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
1975
1980
1985
1990
Year
1995
2000
Composition of stock of foreign born over time
100%
Percent of foreign born
90%
80%
70%
60%
Other
50%
Europeans
40%
Colombians
30%
20%
10%
0%
1975
1980
1985
1990
Year
1995
2000
Average age of foreign born living in Venezuela
60.00
Average Age
50.00
40.00
30.00
1975
1980
1985
1990
1995
Year
Avg age of Colombians
Avg Age of Europeans
2000
Prevalence of entrepreneurship
40%
35%
% entrepreneurs
30%
25%
Foreign born
Venezuelans
20%
Europeans
Colombians
15%
10%
5%
0%
1975
1980
1985
1990
Year
1995
2000
Number of Foreign born entrepreneurs living in Venezuela
140,000
Number of individuals
120,000
100,000
80,000
60,000
40,000
20,000
0
1975
1980
1985
1990
Year
1995
2000
Average Years of Schooling
10.00
9.00
Yrs of Schooling
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
1975
1980
1985
1990
1995
2000
Year
Venezuelan entrepreneurs
European entrepreneurs
European non-entrepreneurs
Main take-away points
 Fraction of foreign born: about 5%
 Went up in 1975-1980 and down afterwards
 Big shift in composition of foreign born from mostly
Europeans to mostly Colombians
 Foreign born much more likely than Venezuelans to be
entrepreneurs
 But fraction of foreign born entrepreneurs decreased over time
 Foreign born do not differ markedly from locals in terms of
educational attainment
II – Assessing link between
international migration and the
growth collapse in Venezuela
European presence and relative economic conditions
2
1.8
1.6
Value relative to 1975
1.4
1.2
1
0.8
0.6
0.4
0.2
Venezuelan real per capita GDP
Number of European-born
Per capita real GDP in S. European sources
Number of European-born entrepreneurs
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
0
Notes -- Per capita real GDP in S. European sources is weighted average across Spain, Italy and Portugal. Weights based on relative shares of foreign-born
across those three countries from 1971 census (0.46, 0.28, and 0.26, respectively). "Entrepreneurs" are those reporting selves as "Patronos" in labor force
survey.
Migration and the collapse: key questions

Generally


How have the large changes in migrant inflows and outflows
affected the Venezuelan economy in the last 30 years?
In particular

How have changes in the fraction foreign born affected
Venezuelan natives’ labor market outcomes?



Outcomes: wages, employment, labor force participation, total
output or production
Focus on natives in the same “group” as foreign-born, such as:
1) industries, 2) states
Examine differential effects of Colombian vs. European
migrants
Challenges to identification


Fraction foreign born (in industries or states) is
endogenous with respect to outcomes of interest

Reverse causation: growing industries may attract more foreignborn

Omitted variables: third factors (e.g., industry subsidies, sectorspecific trade liberalization) may influence both natives’ labor
market outcomes and fraction foreign-born
Need a source of variation in fraction foreign-born that is
exogenous with respect to natives’ labor market outcomes
Identification strategy

Use shocks in migrants’ origin countries as instruments for
changes in fraction foreign-born

Economic conditions in origin countries should affect new
inflows, as well as rate of return migration

To get variation at industry or state level, interact shocks
with initial (~1975) fraction foreign born in industry or
state
First stage regression






Unit of observation is group-country-year (group is industry or state)
For fraction foreign-born Fjkt in group j from country k in year t:
Fjkt = g0Zkt + g1Zkt-1 +…
+ a0(Zkt*Fjk1975) + a1(Zkt-1*Fjk1975) +…
+ year fixed effects
+ country k fixed effects + group j fixed effects
+ ejt
Zjt, Zjt-1, … are current and lagged economic conditions in origin
country k
Interaction with initial fraction in group j Fjk1975 allows effect of shock
to be larger for groups with higher initial presence
Construct predicted fraction foreign born, Fhatjkt, for each origin
country k
Main concern: first stage may be too weak
Instrumental variables regression

For labor market outcome Yjt in “group” (industry or state) j and year t:
Yjt = b0Fraction_Colombianjt + b1Fraction_Europeanjt +…
+ year fixed effects
+ group j fixed effects
+ ejt


Fraction_Colombianjt , Fraction_Europeanjt, … are predicted values
from first stage
Coefficients b0, b1, … are effect of exogenous changes in fraction
foreign born on labor market outcomes of natives in same “group”
Comments welcome
Average Years of Schooling
9.00
8.00
Yrs of Schooling
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
1975
1980
1985
1990
1995
Year
Venezuelans
Europeans
Colombians
2000