TY - JOUR T1 - Is Informality Good for Business? JF - Journal of Human Resources JO - J Hum Resour SP - 1141 LP - 1186 DO - 10.3368/jhr.56.4.1018-9794R2 VL - 56 IS - 4 AU - Sandra V. Rozo AU - Hernan Winkler Y1 - 2021/10/02 UR - http://jhr.uwpress.org/content/56/4/1141.abstract N2 - We examine the effects of large inflows of internally displaced persons (IDP), who are primarily absorbed by the informal sector, on the behavior of formal manufacturing firms in Colombia. To identify causal effects, we employ annual firm-level panel data between 1995 and 2010 and exploit the fact that, when conflict intensifies, forcefully displaced individuals tend to migrate to municipalities where people from their origin locations settled earlier. We find that large inflows of IDP induce sizable negative effects on the intensive and extensive margins of production of formal firms. These effects are stronger for firms operating in sectors that face a stronger competition from the informal economy. ER -