The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs in Colombia

70 Pages Posted: 25 Jul 2022

See all articles by Dany Bahar

Dany Bahar

Brown University - Watson Institute for International and Public Affairs; Harvard University - Center for International Development (CID)

Bo Cowgill

Columbia University - Columbia Business School

Jorge Guzman

Columbia University - Columbia Business School; NBER

Date Written: July 6, 2022

Abstract

This paper shows that providing undocumented immigrants with an immigration pardon, or amnesty, increases their economic activity in the form of higher entrepreneurship. Using administrative census data linked to the complete formal business registry, we study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a pardon. Our identification uses quasi-random variation in the amount of time available to get the pardon, introducing a novel regression discontinuity approach to study this policy. Receiving the pardon has small initial effects but raises formal firm formation to close to parity with native Colombians by 2022. This impact is concentrated on individuals active in the labor force, and on sole proprietorships rather than sociedades (limited liability entities). The new firms created include both employer and non-employer firms and are relatively low on assets. In panel data specifications, the effect of the pardon on firm formation is twice the effect of migration. Our heterogeneous effects suggest a mechanism whereby legalization induces greater investments of time in developing new firms.

Keywords: immigration, entrepreneurship, Colombia, legalization

JEL Classification: L26, J61, K37

Suggested Citation

Bahar, Dany and Cowgill, Bo and Guzman, Jorge, The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs in Colombia (July 6, 2022). Available at SSRN: https://ssrn.com/abstract=4155358 or http://dx.doi.org/10.2139/ssrn.4155358

Dany Bahar

Brown University - Watson Institute for International and Public Affairs ( email )

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Harvard University - Center for International Development (CID)

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Bo Cowgill

Columbia University - Columbia Business School ( email )

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Jorge Guzman (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

NBER ( email )

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