The Indian Journal of Labour Economics (2022) 65:503–517

https://doi.org/10.1007/s41027-022-00371-z

RESEARCH NOTE

Migration and Overeducation of Venezuelans

in the Colombian Labor Market

Jhon James Mora1   · Maribel Castillo Caicedo2 · Gustavo Adolfo Gómez3

Accepted: 5 May 2022 / Published online: 10 June 2022

© The Author(s), under exclusive licence to Indian Society of Labour Economics 2022

Abstract
Using the Great Integrated Household Survey database (GEIH) 2018, this article
analyzes the overeducation situation of the Colombian workers compared with the
Venezuelan migrant population. We study a cohort that migrated five years ago and
a cohort that migrated one year ago. Results show a greater overeducation for Ven-
ezuelans who arrived in the first migration wave than for Venezuelans who arrived
in the second migration wave. Undereducation was found for Venezuelans who
arrived more recently. We find that overeducation, required education, undereduca-
tion returns will also depend on the migration situation and individual and regional
characteristics. The ORU econometric models allow characterizing the Venezuelan
workforce compared with the Colombian workforce in 2018.

Keywords  Migration · Overeducation · Geographic labor mobility · Immigrant

workers

JEL Classification  I26 · I24 · J61

* Jhon James Mora

jjmora@icesi.edu.co
Maribel Castillo Caicedo
mabelcas@correounivalle.edu.co
Gustavo Adolfo Gómez
gagomez@javerianacali.edu.co
1
Economics Department, Universidad ICESI, Cali, Colombia
2
Economics Department, Universidad del Valle, Cali, Colombia
3
Economics Department, Pontificia Universidad Javeriana, Cali, Colombia

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 504 The Indian Journal of Labour Economics (2022) 65:503–517

1 Introduction

The Colombian labor market exhibits different phenomena related to its composi-
tion, quality, and accessibility. Demands related to education are frequent in line
with the theory of human capital, and people were looking to signal themselves
to educate more, in line with signaling theory. But Colombian narrow formal
sector is not ready to absorb the better-prepared labor force; thus, overeducation
appears. Additionally, the crisis in Venezuela has triggered a substantial migra-
tion of Venezuelans to Colombia that creates new challenges for the Colombian
labor market.
Combining the phenomenon of overeducation with Venezuelan migration is
a new and important issue that requires several analyzes as it could shed light
on the actual situation of the Colombian labor market. Combining the phenom-
enon of overeducation with Venezuelan migration is a new and important issue
that requires several analyzes as it could shed light on the actual situation of the
Colombian labor market.
In this article, using information from the Great Integrated Household Survey
(known  in Spanish as  GEIH) 2018, made by the National Administrative Depart-
ment of Statistics (known  in Spanish as  DANE), we find differences between the
labor market of Venezuelans who have spent up to five years in Colombia (first wave
of migration); Venezuelans who have spent up to one year in the country (recent
wave of migration) and Colombians. Specifically, migrants who have spent more
years in the country show higher overeducation, consequently, their educational
return is lower. Additionally, Colombians earn on average less than the first wave of
migration Venezuelans’, a situation that could stem from their overeducation.
The article proceeds as follows. First, we present the theoretical framework.
Second, we provide state of art on immigrants’ overeducation. Then we describe
the methodology used, including the descriptive statistics and the ORU model.
Subsequently, we present our findings. Finally, we develop the conclusions.

2 Human Capital, Signaling Theory, and Overeducation.

Human capital theory exposes the importance of education in getting higher

income returns (Becker 1962). Similarly, signaling theory (Spence 1973) sug-
gests a positive relationship between wages and education level, although it pro-
poses that productivity is not related to education.
Following Castillo (2007) and Mora (2004), we evaluate the quality of the
Colombian labor market by studying the match between the education level of an
individual and the required education by their particular job. We apply an ORU
model (Overeducation, Required education, Undereducation):

• Overeducated: an individual that has a greater educational level than the one
required by their job.

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• Properly educated: an individual that has the required educational level than
their job demands.
• Undereducated: an individual that has a lower educational level than the one
required by their job.

According to Madrigal (2003), there are three methods to measure overeduca-

tion: the objective method, the subjective method, and the statistical method. In the
first one, occupational analysts perform examinations to determine if the educational
level of an individual matches the level required by the job. The subjective method
is done by asking workers a series of questions in which they evaluate the corre-
spondence of their educational level and their job. The statistical method, which we
use in this document, compares the educational level of an individual and its cor-
respondence with the average education years required for its job, plus or minus one
standard deviation.
Signaling models consider the phenomenon of overeducation as permanent
(Spence 1973). Education is a sign of who is more capable and more productive,
thus people feel the need to stand out and educate themselves more. Then, if migra-
tion is not forced, migrants will try to be well trained to get more opportunities in
their destination country. Some hypotheses show that the most educated people who
migrate, do so by necessity or because of opportunities. The last case is motivated
by the educational premium (better income paid in areas where the labor market
receives the most qualified people, usually the capital cities of the countries). If that
educational premium is not met, overeducation appears.
The most common concept used to analyze the educational mismatch is that of
overeducation which means that an individual has a higher educational level than
the one required in his or her workplace, following the ORU standard mentioned
before (Freeman 1976; Duncan y Hoffman 1981; Hartog 2000). Anyway, given that
Venezuelan migration was forced, especially in the second migration wave, the situ-
ation we are analyzing in this document might differ from the one considered by
previously mentioned theories.

3 State of the Art

Studies relating migration to overeducation have been growing in recent years, nev-
ertheless, there has not been any study that has analyzed the Venezuelan migrant
crisis under this perspective until now.
Migrants experience loss of income due to the existence of overeducation (Chis-
wick and Miller 2008, 2010; Green et al. 2007; Lindley 2009; Wald and Fang 2008;
Yeo and Maani 2015). Using panel data for Australia, Wen and Sholeh (2018) found
differences between natives, english-speaking background immigrants, and non
English-speaking background immigrants. They state that immigrants have higher
rates of overeducation than natives and that these rates are even higher for non-eng-
lish speaking background immigrants.
Migration, as well as education, is an economic decision determined by many
different factors. Sjaastad (1962) shows that highly educated people obtain greater

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benefits by migrating and, Faggian and McCann (2009) show that highly educated
people migrate. In the same line, Büchel and Van Ham (2003) analyze the effect
of overeducation according to the availability of work in the local market through
matching models, finding that the most educated migrants benefit from migration.
Hensen (2009) studies Dutch graduates and finds that if they can migrate, they are
more likely to find suitable jobs, accordingly, Comunian et  al. (2010) show that
migration to London from other places in Europe increases the chances of having a
professional job.
Hicks (1932) states that to analyze the causes of migration, net economic advan-
tages, and wage differences, among other factors, should be considered sequentially
to find if the effect goes from education to migration or conversely. Borjas (1985)
emphasizes the importance of using panel data to avoid bias in the analysis of differ-
ent migrant cohorts.
Dustmann and Glitz (2011) focus their analysis on international and non-local
migration and find that education and skill acquisition plays a significant role at sev-
eral stages of an individual’s migration. Different authors also suggest that migra-
tion is induced by the possibility of acquiring human capital (Dustman 1994; Borjas
and Bratsberg 1996; Dustman et al. 2010).
Chiswick (1978) states that when immigrants arrive in a new country their edu-
cational return is low, but after 10–15 years in the country, considering a Mincerian
equation, they reach a similar educational level to that of the natives and they man-
age to level their income.
Some authors have also suggested that immigrants tend to be more overeducated
than natives but that this gap decreases over time (Chiswick and Miller 2007, 2008;
Green et al. 2007; Lindley and Lenton 2006; Nielsen 2007; Sanromá et al. 2008).
Aleksynska and Tritah (2013) analyze immigrants from 17 countries that
migrated to 22 European countries between 2002 and 2009 and find overeducation
in the first years which is later levered. They state that in Europe 22% of immigrants
are overeducated and that the countries with the highest percentage of overeducated
immigrants are Portugal with 47% and Great Britain with 35%.
Spence (1973) drag attention to the possibility of an imperfect evaluation of work-
ers by employers, which aggravates the educational mismatch situation. McGuinness
(2006) made a review of the literature on overeducation and found the phenomenon to
be potentially costly to the economy in general. Additionally, he stated migration has
a role in labor market size which could influence overeducation due to limited spatial
flexibility.
Waldorf and Yun (2015) analyzed the migration of young graduates in the United
States and found lower rates of overeducation when the unemployment rate is low.
Meliciani and Radicchia (2016) studied the impact of informal work search channels
on the probability of being overeducated in the labor market in Italy. Considering the
impact of spatial flexibility, they argue that overeducation is reduced for some immi-
grants in more populated areas. Along the same lines, Jauhiainen (2011) analyzed the
Finnish labor market and found that the probability of being overeducated decreases
in a large labor market and increases in less concentric areas, affecting heavily women
who work in less populated areas because they usually work in care services.

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Mckenzei and Rapoport (2006) use a rural sample and state that migrating has a
positive effect on the educational level of migrants. Walker and Zhu (2005) found
higher overeducation on graduates of social science and arts.
Joona et  al. (2014) study overeducation in Sweden with data from 2002 to 2008,
under a particular situation, the language barrier, finding overeducation in the case of
migrants from the Nordic countries, and undereducation in the case of migrants from
non-Western countries.
San Romá et al. (2015) analyzed the portability of human capital of migrants from
six different regions to Spain using data from the Spanish Census. They found that
migrants stay in Spain between 6 and 7 years, but only after 7 and before 9 years of
living in Spain, the wage gap between natives and migrants starts to decrease. They
also posit there is an incidence of language and level of development of the country of
origin on the intensity of overeducation that migrants experience.
Despite the growing interest in the relationship between migration and overeduca-
tion, there are no studies that have analyzed them in the Colombian context, therefore
this document is a pioneer in this subject. Nevertheless, some studies that analyze the
educational mismatch concerning wages in Colombia, for example, Mora (2004), Cas-
tillo (2007), Mora and Santacruz (2007) and Mora (2008) who analyzed overeducation
in Colombia and Cali, finding the presence of this phenomenon in the Colombian labor
market.
In the next section, the ORU model is developed.

4 ORU Statistical Model

To evaluate the presence of overeducation, we estimate the following model:

LWhi = 𝛽0 + 𝛽1 SiR + 𝛽2 SiO + 𝛽3 SiU + 𝛽4 Expi + 𝛽5 Exp2i + 𝛽6 ICi + 𝛽7 RCi + 𝜀i (1)

where LWhi is the logarithm of hourly wages for the individual i, SiR is the years of
education required, SiO is the years of education above the level required (overeduca-
tion), SiU is the years of education below the required level (undereducation), Exp is
the years of potential experience (Age—Years of education—7), Exp2i is the poten-
tial experience squared and 𝜀i is the random error term for the individual i. ICi are
individual control as if the individual is a Head of Household or if the individual are
Married (both variables are dummies). RCi is the regional control for the main cities
in Colombia (Bogota, Medellin and Cali).
In this way, the overeducated individuals are compared with individuals who per-
form the same work but who have less education and thus, are not overeducated.
Regarding returns to overeducation, the coefficient is usually positive but lower than
the coefficient of returns to required education (McGuinness 2006: pp 395). On
the other hand, the coefficient of returns to undereducation is usually negative and
smaller than the coefficient of returns to required education for a particular job.
To calculate the required education, the average of the years of education per
occupation was estimated, using two digits, plus or minus one standard deviation.

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Table 1  Descriptive statistics of the variables used in the models

Variable/group All Colombians Venezuelans Venezuelan 5 years Venezuelan 1 year

Experience 18.37 18.54 11.49 11.23 11.26

Child-under2 15.7% 15.4% 26.0% 26.0% 26.8%
Household head 43.1% 43.2% 37.7% 37.8% 34.9%
Married 31.1% 30.9% 40.4% 40.6% 38.5%
Woman 48.2% 48.3% 41.5% 41.2% 41.5%
Total 57,670 56,252 1,330 1,244 684

Source: Own calculations based on data from the GEIH (2018)

The years of overeducation are those above the years of required education while the
years of undereducation are those below the years of the required education.
It should be considered that the estimates made from Eq. (1) could be affected by
selection bias because people who are investing in human capital but are not report-
ing wages as they are unemployed are not taken into account in the data. This bias
can be corrected by estimating the probability of an individual participating in the
labor market. Therefore, the selection bias was incorporated into Eq. 1, as follows:

LWhi = 𝛽0 + 𝛽1 SiR + 𝛽2 SiO + 𝛽3 SiU + 𝛽4 Expi + 𝛽5 Exp2i + 𝛽6 ICi + 𝛽7 RCi + 𝜌𝜆i + 𝜀i

(2)
In Eq. 2, 𝜆i is the inverse Mills ratio obtained from a model of labor participation,
LP. Labor participation takes the value of one when the individual participates in the
labor market (employed or unemployed) and zero when the individual is inactive as
follows:

(3)
[ ]
LPi = 1 𝛽0 + 𝛽1 Si + 𝛽2 Under2i + 𝛽3 Womani + 𝜇i

where ­Si is the years of education; Under2 is a dummy variable that takes the
value of one if there are children under 2 years old in the household and zero oth-
erwise; Finally, Woman is also a dummy variable that takes the value of one for
women and zero for men.

5 Data

Data comes from the Large Integrated Household Survey (GEIH), conducted by
DANE for the year 2018. Descriptive statistics of the variables are given in Table 1.
Table  1 shows relevant data related to the composition of the household, for
example, Venezuelans claim to have children under 2 years of age in households in
greater proportion than Colombians, and this proportion is higher for the last wave
of migration. Colombians manifest to be head of household more than Venezuelans.
There are fewer Venezuelan women in the sample compared to Colombian women.
In greater proportion, Venezuelans say they are married. Additionally, Colombians
have more work experience than Venezuelans.

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Table 2  Education level according to the ORU model

Education level/Popula- All Colombians Venezuelans Venezuelan 5 years Venezuelan 1 year
tion

Required education 74.5% 74.7% 66.6% 66.3% 62.4%

Overeducation 15.0% 14.7% 28.9% 29.2% 32.6%
Undereducation 10.5% 10.7% 4.5% 4.5% 5.0%
All 57,670 56,252 1,330 1,244 684
Average Years Education 12.3 12.29 12.46 12.4 12.42

Source: Own calculations based on data from the GEIH (2018)

In Table 2 it can be seen that in terms of the ORU model, Colombians have on
average a better composition of educational equivalence than Venezuelans. Colom-
bians have a higher percentage of people with the required education, 74,7% com-
pared to 66,6% of Venezuelans. As for overeducation, it is greater for Venezuelans
in all migratory waves. On the other hand, Venezuelans present lower undereduca-
tion than Colombians and, on average, Venezuelans have more years of education.

6 Results

The main results of the applied econometric model are presented below,
In Table 3, column "All" shows the estimate of overeducation for all individuals.
Column "Col" for only Colombians (excluding other nationalities). Column "Venz"
for people born in Venezuela. Column Venz5 shows the estimate of the equation of
overeducation for Venezuelans who were in Venezuela 5  years ago (first wave of
migration), while column Venz1 shows estimates for Venezuelans who were in Ven-
ezuela in 2017 who arrived in Colombia in 2018 (recent wave of migration).
As shown from Table 3, variables are statistically significant at 95%. We include
individual control dummy variables for household head and married and regional
control dummy variables for main principal cities in Colombia (Bogota, Medellin,
and Cali). Household head Venezuelan workers had more wages than Colombian.
Therefore, Venezuelan workers living in Bogota receive higher wages than Colom-
bian workers living in Bogota. However, it is the opposite in Medellin since Colom-
bian workers receive higher wages than Venezuelan workers. Cali is a city where
workers receive approximately the same salary regardless of nationality.
Regarding returns to education, for the population as a whole, they were around
12% in 2018. However, for Venezuelans, they are six percentage points lower. Fur-
thermore, for Venezuelans who arrived in 2017 Colombia, returns to education are
nine percentage points lower than for Colombians.
The overeducation coefficient for Colombians and the total population follows
international standards; it is positive and lower than the required education coef-
ficient. However, in the case of Venezuelan migrants, those who are overeducated
have a greater return than those who are adequately educated for their occupation.

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Table 3  Estimate of returns to education by groups

All Col Venz Venz5 Venz1

SR 0.122884*** 0.122355*** 0.065498*** 0.049399*** 0.032766***

[0.000554] [0.000558] [0.003839] [0.004000] [0.007777]
SO 0.117141*** 0.116307*** 0.113638*** 0.105114*** 0.110443***
[0.001051] [0.001059] [0.007239] [0.007658] [0.014947]
SU − 0.053407***  − 0.050980*** − 0.087697*** − 0.082923*** − 0.090053***
[0.001010] [0.001016] [0.007092] [0.007497] [0.014575]
Exp 0.022662*** 0.022254*** 0.015955*** 0.013831*** 0.013180***
[0.000288] [0.000290] [0.002111] [0.002112] [0.003782]
Exp2 − 0.000245*** − 0.000239*** − 0.000320*** − 0.000312*** − 0.000280***
[0.000005] [0.000005] [0.000053] [0.000053] [0.000097]
Constant 6.73e + 00*** 6.74e + 00*** 7.59e + 00*** 7.77e + 00*** 7.98e + 00***
[0.014949] [0.015055] [0.097504] [0.100687] [0.185896]
Individual con-
trols
Household Head 0.119553*** 0.118607*** 0.152270*** 0.143309*** 0.142936***
[0.002684] [0.002712] [0.014949] [0.015041] [0.028750]
Married 0.026277*** 0.030425*** 0.031663* 0.041501** 0.049543
[0.002760] [0.002796] [0.014382] [0.014442] [0.026747]
Regional controls
Bogotá D.C 0.166059*** 0.167360*** 0.190368*** 0.177914*** 0.209104***
[0.005134] [0.005214] [0.025646] [0.025629] [0.046013]
Medellín 0.135300*** 0.138891*** 0.117128*** 0.126381*** 0.111256**
[0.004610] [0.004679] [0.023443] [0.023374] [0.039626]
Cali 0.115563*** 0.119068*** 0.119152*** 0.131332*** 0.116752*
[0.005717] [0.005801] [0.028955] [0.028872] [0.047866]
R2 0.501 0.504 0.193 0.151 0.108

Standard errors in brackets. *p < 0.05, **p < 0.01, ***p < 0.001. Source: Own calculations based on data
from the GEIH (2018)

This could stem from the fact that many migrants could not arrive with documents
certifying their education and to difficulties of recognition of obtained degrees.
Also, it could be due to higher education requirements for Venezuelans than for
Colombians for a particular job.
Venezuelans who traveled in the first wave of migration receive higher payments
but are more educated. They get even a higher return to education than Colombians,
which goes in line with predictions made by Chiswick (1978).
Concerning undereducation, it is clear that under-educated workers receive lower
wages than workers with the required level of education. Still, in the case of Ven-
ezuelan migrants, the reduction in returns to education is double that of Colombian
workers.
Following, the overeducation estimation is corrected by selection bias using labor
participation. Results found are:

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Table 4  Estimate of returns to education by groups and correction of selection bias

All Col Venz Venz5 Venz1

SR 0.101784*** 0.101201*** 0.051042*** 0.034673*** 0.024673***

[0.000742] [0.000755] [0.004086] [0.004238] [0.007925]
SO 0.083844*** 0.083312*** 0.076452*** 0.066491*** 0.075792***
[0.001279] [0.001294] [0.007976] [0.008392] [0.016226]
SU − 0.047201*** − 0.045048*** − 0.071496*** − 0.065496*** − 0.070304***
[0.001035] [0.001041] [0.007281] [0.007690] [0.014998]
Exp 0.023241*** 0.022844*** 0.015588*** 0.013295*** 0.013574***
[0.000283] [0.000286] [0.002073] [0.002070] [0.003725]
Exp2 − 0.000237*** − 0.000232*** − 0.000274*** − 0.000262*** − 0.000265**
[0.000005] [0.000005] [0.000052] [0.000051] [0.000095]
Constant 7.29e + 00*** 7.30e + 00*** 7.83e + 00*** 8.01e + 00*** 8.08e + 00***
[0.019694] [0.020068] [0.100285] [0.102972] [0.186338]
Individual con-
trols
Household Head 0.094166*** 0.093915*** 0.117152*** 0.108663*** 0.112076***
[0.002704] [0.002732] [0.015070] [0.015134] [0.028998]
Married 0.012764*** 0.016583*** 0.031017* 0.041955** 0.051729*
[0.002743] [0.002781] [0.014169] [0.014214] [0.026404]
Regional con-
trols
Bogotá D.C 0.169418*** 0.171092*** 0.178780*** 0.167172*** 0.191480***
[0.005109] [0.005187] [0.025519] [0.025474] [0.045719]
Medellín 0.134831*** 0.138805*** 0.109121*** 0.118589*** 0.102263**
[0.004576] [0.004643] [0.023272] [0.023177] [0.039270]
Cali 0.116969*** 0.120752*** 0.110377*** 0.122703*** 0.104358*
[0.005645] [0.005726] [0.028620] [0.028514] [0.047394]
Labor participa-
tion (Selection)
S 0.039208*** 0.039023*** 0.055609*** 0.056944*** 0.0495828***
[0.00017] [0.00018] [0.00138] [0.00145] [0.00237]
Under2 0.059314*** 0.064357*** − 0.105551*** − 0.118118*** − 0.1154197***
[0.00252] [0.00261] [0.01132] [0.01165] [0.0158]
Woman − 0.177978*** − 0.173572*** − 0.35541*** − 0.361141*** − 0.365478***
[0.00171] [0.00174] [0.0101] [0.01045] [0.01734]
Probability 39.06% 38.82% 49.01% 49.46% 44.81%
Mills ratio − 0.434755*** − 0.432962*** − 0.323202*** − 0.322175*** − 0.260278***
lambda
[0.009337] [0.009589] [0.028148] [0.027752] [0.047900]

Standard errors in brackets. *p < 0.05, **p < 0.01, ***p < 0.001. Source: Own calculations based on data
from the GEIH (2018)

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First, Table 4 shows the existence of selection biases since 𝜆i is statistically sig-
nificant. Usually, in salary models, the sign of 𝜆i is negative because factors that
increase labor participation reduce the average salaries of individuals. Accordingly,
if we do not correct by selection bias, coefficients of estimate (1) will neither be con-
sistent nor efficient.
Regarding Table 4, marginal effects and not β´s are reported for the labor partici-
pation model. According to the results, an additional year increases the probability
of participating in the labor market by 4% for Colombians and approximately 5% for
Venezuelans. Additionally, having children under 2 years old increases the probabil-
ity of participating in the labor market for Colombians by 6%.
In the case of Venezuelan migrants, having children under 2  years old reduces
the probability of participating in the labor market. This is an interesting finding
that could be originated in Venezuelan public policies that generated incentives to
not participate in the labor market, for example, policies for incentivizing birth rate
as the program “mother to the neighborhood” that gave money to families for each
child they had. Another possible reason is that the majority of Venezuelan families
who ask for alms have a child in the place where they do it. This increases vulner-
ability for these children, and negatively affects the life quality of families. Anyway,
this situation was not included in this analysis due to the limitations of available data
in the survey.
Finally, Venezuelan women have a probability of participating in the labor market
of approximately 35%, 15 percentage points above Colombian women. This could
be because Venezuelan women might be replacing Colombian women in care ser-
vices such as hairdressers and domestic jobs, among others. We tried to corroborate
this hypothesis, but it was not possible with existing data.
Concerning overeducation, Colombian workers evidence similar results to those
found worldwide. The overeducation coefficient is positive and lower than the
required education coefficient. For Venezuelan migrants, while both coefficients are
positive, the overeducation coefficient is higher by almost 5 percentage points than
the required education coefficient. In this way, the Colombian labor market assigns
higher returns to education to Venezuelan migrants who are overeducated.
This situation seems to comply with the hypotheses of theories of human capi-
tal and signaling theory about the relationship between education and educational
return, but, migration by necessity and migration by force as the ones experienced
by Venezuelans have not been considered in these theories. It should also be men-
tioned that highly educated Venezuelans who settled in Colombia in the first wave
of migration brought investment and skilled labor to the country, positively affecting
the economy and the labor market in general.
With regard to undereducation, people with a lower level of education than the
one required for their position get negative returns, and in the case of the Vene-
zuelan migrant population, the difference in returns is almost double. This situation
is more pronounced in Venezuelans who arrived in Colombia in the second wave
of migration as they have on average lower human capital, as corroborated in the
model and Table 4. Thus, it is expected that they present the aforementioned condi-
tions. On the other hand, the migration policy is more aware of this type of migrants

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because of the social support issue. Regarding potential experience, returns to an

additional year of potential experience are around 2% for Colombian workers, while
for Venezuelan immigrants returns are around 1%.
Finally, to individual control dummy variables for household head and married,
we find that household-head Venezuelans had more wages than Colombian work-
ers. Venezuelan workers living in Bogota receive slight wages than Colombian
workers living in Bogota. However, it is the opposite in Medellin since Colom-
bian workers there receive 2 percent point more wages than Venezuelan workers.
Cali is a city where workers receive approximately the same wages regardless of
nationality.1

6.1 Test for the Equality of Regression Coefficients

The salary function (1) has been estimated for five groups: All, Colombians, Vene-
zuelans, Venezuelans who have spent up to five years in Colombia, and Venezuelans
who have spent up to one year in the country. After obtaining the coefficients cor-
responding to required education, overeducation, and undereducation, and under the
assumption that the variance of the error is the same for all groups, we evaluate the
significance of the difference in the coefficients between groups.
Based on the works of Clogg et al. (1995) and Raymond et al. (1998) the differ-
ence between the coefficients is evaluated through the following expression,

𝛽̂ki − 𝛽̂k
j
z= √
( )2 ( )2 (4)
s𝛽̂i + s𝛽̂j
k k

where i and j correspond to different groups, s𝛽̂i is the standard error of the coeffi-
1
cient 𝛽1 of the group i  , while s𝛽̂j is the standard error of the coefficient 𝛽1 of the group
1
j . Where the null hypothesis states that 𝛽̂ki = 𝛽̂k.
j

As previously indicated, the variables are statistically significant for all the con-
sidered groups. Using the hypothesis contrast of Eq.  4 we reject the null hypoth-
esis that the coefficients corresponding to required education are equal between
Colombians and Venezuelans who were five and one years ago in Venezuela
[(𝛽̂kCol − 𝛽̂kVenz5 = 0 ); ( 𝛽̂kCol − 𝛽̂kVenz1 = 0)], and it is observed that the returns to educa-
tion of Colombians are greater than those of Venezuelans, as can be seen in Table 5.
The overeducation coefficients between Colombians and Venezuelans are not sta-
tistically different while the undereducation coefficients are. Results were consistent
when we corrected for selection bias (see Table 6).
On the other hand, it was found that the difference between the coefficients
obtained for undereducation between Colombians and Venezuelans and Ven-
ezuelans who were five years ago in Venezuela (Venz5), almost two percentage
points.

1
  Mora et al (2022) do not find wages differences between Venezuelan and Colombian workers.

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Table 5  Test for the equality of regression coefficients across groups

Education 𝛽̂Col−All Z 𝛽̂kCol−Venz Z 𝛽̂kCol−Venz1 Z 𝛽̂kCol−Venz5 Z
k

Required − 0.000529 − 0.672765 0.056857 14.656356† 0.089589 11.490199† 0.072956 18.064081†

Overs − 0.000834 − 0.558979 0.002669 0.364814 0.005864 0.391339 0.011193 1.447831
Unders 0.002427 1.694117 0.036717 5.124919† 0.039073 2.674334† 0.031943 4.222175†

† Reject null hypothesis p < 0.05 (t = 1.98)

Source: Own calculations based on Table 3

Table 6  Test for the equality of regression coefficients across groups in selection bias estimation
Education 𝛽̂kCol−All Z 𝛽̂kCol−Venz Z 𝛽̂kCol−Venz1 Z 𝛽̂kCol−Venz5 Z

Required − 0.000583 − 0.550738 0.050159 12.071473† 0.076528 9.613005† 0.066528 15.454641†

Overs − 0.000532 − 0.292401 0.00686 0.848980 0.00752 0.461987 0.016821 1.980997†
Unders 0.002153 1.466661 0.026448 3.595901† 0.025256 1.679916 0.020448 2.635004†

† Reject null hypothesis p < 0.05 (t = 1.98)

Source: Own calculations based on Table 4

7 Conclusions

The Colombian labor market is changing and can be interpreted differently in terms
of two theories that were considered in this document: the theory of human capital
and the theory of signaling. In the case of migrant Venezuelans and their activity in
the Colombian labor market, important situations are arising that must be analyzed
faced with the complex situation that the neighboring country is experiencing. This
is why this document becomes relevant.
This article allows understanding the amount of education and the type of migra-
tion that Venezuelans have, and that when compared with Colombians enable the
characterization of the type of Venezuelan labor supply that is present in the Colom-
bian labor market; additionally, public policy on migration issues require studies
like this one to make decisions based on evidence.
The ORU models proved the existence of greater overeducation for Venezuelans
who arrived in Colombia in the first wave of migration compared with Colombians
and Venezuelans who arrived in Colombia in the recent wave of migration. Educa-
tional mismatches generate social costs in the labor market, both for labor supply
and demand.
The phenomenon of Venezuelan migration to Colombia must continue to be
monitored to evaluate if, as suggested by the theory, the more time migrants spend
in the country the greater the reduction in the educational mismatch because five
years seems still like a short time to find an adjustment between education and edu-
cational return for Venezuelan immigrants.

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The Indian Journal of Labour Economics (2022) 65:503–517 515

This article is a pioneer in the econometric analysis of the ORU models and in
finding quantitative relationships of the phenomenon of Venezuelan migration in
Colombia, considering the role of education on human capital. The correction for
selection bias and the statistical independence tests shows evidence in line with rel-
evant theory, but that should be reviewed in the upcoming future because diverse
facets of the phenomenon might come up, and so the effect of Venezuelan migration
on the Colombian labor market might be modified.
Finally, this article is a first approach to the educational mismatch in the Colom-
bian labor market, incorporating the issue of Venezuelan migration. Academics
must continue monitoring the phenomenon in the upcoming years with GEIH data
to analyze if the findings are maintained over time.

Funding  There is no funding.

Declarations 

Conflicts of interest  The authors declare that there is no conflict of interest.

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