Detecting Informal Farm Employment From Migration Waves

Abstract

We introduce a "forensic" approach to detect informal employment arising from migration shocks and assess its effects on firms. Exploiting large, exogenous inflows from the Arab Spring to southern Italian coasts, we use vineyard micro data to identify anomalies in labor productivity (quantity per reported hour) as markers of unreported work. Following the shock, about 80% of exposed farms - particularly small, remote ones - exhibit abnormally high reported (relative to predicted) productivity. Analyzing other outcomes of these farms reveals no changes in reported sales, prices, or formal wages (already near the minimum), but a significant reduction in labor costs mirrored by higher profits. With quantities and non-labor costs unaffected, anomalous productivity spikes imply a 7% incjoint with Lorenzo Trapani (University of Leicester) and Timm Gries (Bocconi University)rease in informal employment.