# **1 Introduction**

In a world, where 79.5 million of its 7.9 billion people are forcibly displaced due to persecution, conflicts, violence and human rights violations, the impact of forcibly displaced population<sup>1</sup> on the host countries is an issue of great significance. Past research finds mixed results on the effect of forced displacement on labor market outcomes, education, environment, crime and fiscal balance. This paper extends the present literature by studying the short-run impact of the influx of Venezuelan refugees and migrants on the overall labor market and the fiscal variables of Roraima, the state bordering the Rep ́ublica Bolivariana de Venezuela at the north and the main gateway of the Venezuelan refugees and migrants entering Brazil.

Since 2013, the Rep ́ublica Bolivariana de Venezuela, once one of the richest countries in Latin America, has been plunging in to one of the worst economic and social crises of the modern day. Economic activity has been contracting with GDP (PPP) shrinking at a rate of 35% in 2019 according to United Nations data. The inflation rate hit 929,797% in 2019 (IMF, 2019), while 89% of the population has been estimated to be living in poverty (ENCOVI, 2018). Health conditions have worsened with an average Venezuelan losing 10 kilos of body weight in 2017 and infant mortality rising to 26 per 1,000 live births in 2016 from 14.6 per 1,000 live births in 2010. An average of 89 homicides were reported per 100,000 inhabitants in 2019, which is almost three times that of countries that are at war (World Bank, 2019). This worsening economic and social condition generated an unprecedented exodus of about 5.6 million<sup>2</sup> Venezuelans in search of a better future and ability to avail basic human rights. Colombia and Peru have been the most significant hosts followed by Chile, Ecuador, the United States and Brazil. As of January 31, 2021, Colombia has about 1.7 millions of the Venezuelan refugees and migrants, which is after about 60,000 to 100,000 Venezuelans returned back to reunite with their families during the COVID-19 pandemic (Mazza, 2020). Peru stands second with about 1 million refugees and migrants, while Chile and Ecuador are the third and fourth significant hosts with about 0.47 million and 0.41 million Venezuelan refugees and migrants respectively. Brazil is hosting about 0.26 million Venezuelans (18% of all its total migrant and refugee population) as of the fourth quarter of 2020, 76 times the number of Venezuelan refugees and migrants in 2015, resulting in Brazil issuing a federal decree recognizing the situation as a humanitarian crisis.<sup>3</sup> Although leaders of Latin American countries have been accommodative in welcoming and granting legal status to Venezuelan refugees and migrants (Selee and Bolter, 2020), the sheer size of the Venezuelan refugees and migrants means that addressing the humanitarian crisis and the population shock may affect the labor market outcomes and public resources of these countries. Research on Colombia (Bonilla-Mejia et al. (2020), Caruso et al. (2019) and Penaloza (2019)) finds short-term negative effects of the Venezuelan influx on informal wages and employment for the host population. However, the impact on the host communities depends on the rules governing the labor market and relative socio-economic characteristics of both the refugees and the host communities (Verme and Schuettler (2021) and Hennessey and Hagen-Zanker (2020)) and Brazil is one of the few countries in Latin America that has universal access to education, healthcare and social protection irrespective of documentation status and prohibits any kind of discrimination at work (Selee and

> 1Forced displacement population include refugees, returnees, expellees, escapees and internally displaced person. This paper uses forcibly displaced and refugees and migrants interchangeably.

> 2Dashboard of R4V as of 5th May 2021

> 3http://www.planalto.gov.br/ccivil03 _/ato_ 2015 _−_ 2018 _/_ 2018 _/decreto/D_ 9285 _.htm_

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