35 Pages Posted: 8 Aug 2016 Last revised: 6 Jul 2017
Date Written: August 5, 2016
This article examines the effects of inflows of displaced persons (IDP), resulting from violence, on firms' behavior in an economy with a large informal sector, as is commonly observed in developing countries. To identify causal effects, we exploit the fact that IDP tend to migrate to areas where individuals from their same origin locations have already begun settling. We find that IDP induce sizable positive effects on the extensive and intensive margin of production and blue-collar employment of formal firms. We find evidence that IDP have positive effects on the wages of formal firms. We also find that IDP largely join the informal economy.
Keywords: Migration, Firms, Informality
JEL Classification: D22, J61, O17
Suggested Citation: Suggested Citation
Rozo, Sandra V. and Winkler, Hernan, How do Forced Migrants Affect Businesses? The Role of Informality in Developing Countries (August 5, 2016). Available at SSRN: https://ssrn.com/abstract=2819225