Legalizing Entrepreneurship

Abstract

We use administrative data linked to the complete formal business registry to study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a resident visa. Immigrants who receive the visa increase their economic activity in the form of higher entrepreneurship by a factor as high as 12, bringing it to parity with native Colombians four years later. To establish causal estimates, we develop a novel extension of a regression discontinuity design. Our design uses variation in the running-variable (coming from rain) to instrument for migrants' choices to apply for visas.

Keywords: immigration, entrepreneurship, Colombia, legalization

JEL Classification: L26, J61, K37