ESSAYS ON MIGRATION AND DEVELOPMENT ECONOMICS

Abstract

This dissertation studies how large-scale population movements, whether through migration or colonization, shape economic outcomes in receiving economies. It focuses on their effects on native workers, firms, local markets, and trade-competitive advantage. The first two chapters examine contemporary immigration shocks and highlight different channels through which immigration influences host economies. Chapter 1 investigates the effect of immigration on firms’ capital deepening, focusing on the role of immigrant skills. We exploit the quasi-natural experiment of the arrival of one million immigrant workers from Venezuela and Haiti to Chile between 2015 and 2019, which generated substantial variation in labor supply by skill level. Using a unique administrative dataset that links workers to firms across the entire Chilean private sector, combined with confidential balance sheet data, we find that a one percentage point increase in the share of skilled immigrants among a firm’s skilled workforce leads approximately to a 2 percent increase in capital per worker. This relationship is nonlinear: the effect diminishes as the firm’s share of immigrants rises, consistent with imperfect substitutability between skilled natives and skilled immigrants. The results highlight the potential for immigration to stimulate firm-level investment and suggest that the effects of immigration are stronger when labor market integration between immigrants and natives is high. Chapter 2 evaluates the impact of immigration shocks on local housing markets in Italy, an important but less studied channel through which immigration can affect native welfare. Housing prices and rents influence the real income of native residents and can trigger native relocation, thereby affecting broader labor market dynamics. I estimate the Italian housing market’s response to increased immigration from 2010 to 2019, exploiting geographical and temporal variation in immigrant settlement patterns. Theoretical predictions are ambiguous: while demand-side pressures should raise prices, native outflows could exert downward pressure. The empirical results show a positive and statistically significant association between immigrant inflows and both housing prices and rents. On average, a 1 percent increase in the immigrant stock raises housing prices by 0.03 percent and rents by 0.04 percent. I find no evidence of native flight. Chapter 3 turns to a historical context and develops a theoretical model to explain the shift in comparative advantage in the textile sector between India and Great Britain during the colonial period. We analyze the role of an exclusive trading company that monopolizes the foreign trade of a colony, using the East India Company (EIC) as a case study. The framework explains both the rise and the eventual dismantling of the EIC, particularly in light of Britain’s Industrial Revolution. More broadly, the chapter suggests that colonial policies might be particularly burdensome for colonies with rival economies, a situation often overlooked in studies of the New World, where colonies were typically complementary to their metropolises.