Are Immigration Inflows Good for Business? The Role of Informality in Developing Countries

46 Pages Posted: 8 Aug 2016  

Sandra V. Rozo

University of Southern California - Marshall School of Business

Hernan Winkler

World Bank

Date Written: August 5, 2016

Abstract

This article examines the effects of large inflows of displaced persons (IDPs) resulting from violence on firms' behavior in an economy that contains a large informal sector, as is commonly observed in developing countries. To identify causal effects, we exploit the fact that areas closer to the displaced persons' locations of origin should receive higher immigration inflows. We find that large IDPs induce sizable negative effects on the performance of formal firms. These effects are mainly driven by the positive association between large IDPs and the size of the informal sector.

Keywords: Migration, Firms, Informality

JEL Classification: D22, J61, O17

Suggested Citation

Rozo, Sandra V. and Winkler, Hernan, Are Immigration Inflows Good for Business? The Role of Informality in Developing Countries (August 5, 2016). Available at SSRN: https://ssrn.com/abstract=2819225

Sandra V. Rozo (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

HOME PAGE: http://www.sandravrozo.com

Hernan Winkler

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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