How Venezuelan immigrants improve the economies of their receiving countries

Calculations by the authorities of Colombia, the country receiving the largest number of Venezuelans (about 2.5 million by December 2022), indicate that in 2019 they allocated about 600 US dollars to each migrant. which translates to It spent US$1.3 billion to help newcomersHe 0.5% of Colombian GDP.

But there are two good news about it:

All this, according to a new study by economists at the International Monetary Fund, titled “Regional Spillovers from the Venezuela Crisis.”

According to research, spending on meeting the needs of Venezuelan migrants ranges from 0.1% to 0.5% of GDP, depending on the country.

Between 2020 and 2025 it is estimated to be 0.4% in Colombia; 0.25% for Ecuador and Peru; and 01,% for Chile.

The massive influx of immigrants has an impact on the local labor market, which is initially mixed.

“As more immigrants find work (even if it doesn’t match their skills), total employment rises and real wages fall. Low wages discourage some local workers from participating in the labor market, while overall unemployment rises slightly, with the proportion of unemployed immigrants higher than that of local workers,” the report says. .

“Despite these effects, global labor income increases in line with the increase in global employment. For firms, lower real wages translate into lower production costs and higher profits,” he adds.

Jaime Guajardo, lead author of the IMF studyVenezuela points out that it is difficult to estimate the contribution of immigration to the GDP of receiving countries so far, because these effects take time and because of limitations in the availability of recent data on employment status or type of employment migrants, partly due to the epidemic.

Nevertheless, in the study they carried out estimates of GDP growth in those countries between 2016 and 2030, taking two different scenarios: one without immigrants and another with them.

To account for the latter, they assumed that at first most migrants would find unskilled jobs in the informal economy, and in subsequent years, only a fraction of them would join the formal sector with jobs suitable for their human capital. Productivity of the economy in the medium term.

“Under these estimates, GDP of Colombia, Chile, Ecuador and Peru –Countries receiving 69% of Venezuelan immigrants– 1.5% to 2.5% increase Corresponding to a no-migration scenario between 2016 and 2022. And it is expected to increase by 2.5 to 4.5 percent by 2030,” Guajardo told BBC Mundo via email.

The IMF study took into account many factors in its calculations: the impact of migrant flows on employment and productivity, the working age and their educational level, labor market conditions, and the weather for how long migrants take. What type of economy and in which sector is the job available?

According to that study, The country with the largest impact of Venezuelan immigration on GDP growth in 2030 is Peru (4.4%).It is followed by Colombia (3.7%), Ecuador (3.5%), Chile (2.6%), Panama (1.9%), Dominican Republic (1.1%), Costa Rica (0.6%) and Uruguay (0.6%).

Guajardo notes that countries with a higher GDP impact have more migrants of working age and migrants are more qualified relative to the local population.

“Due to its proximity to Venezuela, Colombia receives a high proportion of immigrants who are not of working age. (children or the elderly) and have a high proportion of migrants with fewer years of education, many of whom cannot afford transportation to more distant countries in the region. “This explains why the impact on Colombia’s GDP is lower than the impact on Peru’s GDP, even though Colombia has received high migration flows relative to its population,” he pointed out.

It should be noted that these projections until 2030 are based on the assumption that Venezuelan immigration will continue to grow until it reaches 8.4 million people in 2025, which is equivalent to more than 25% of Venezuela’s population in 2015.

It requires receiving states to maintain policies of welcome and support for new arrivals with humanitarian assistance and access to education, health and basic services.

But what can these countries do to increase the GDP impact of the influx of Venezuelan immigrants?

Guajardo help integrate immigrants into the formal labor market, issue work permits, and confirm studies and academic titles.

“This It will allow immigrants to find jobs that match their educational level, thereby increasing the productivity of the economy. “This will reduce the cost to governments of providing humanitarian aid and access to education, health and basic services, as migrants will be able to bear some of these costs themselves and pay taxes,” it says.

“In this way, the financial costs incurred at the beginning will be more than offset in the medium term,” he concludes.

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