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International migration in Venezuela and the Growth Collapse - page 19 / 22

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First stage regression

Unit of observation is group-country-year (group is industry or state)

For fraction foreign-born Fjkt in group j from country k in year t:

Fjkt = 0Zkt + 1Zkt-1 +…

+ 0(Zkt*Fjk1975) + 1(Zkt-1*Fjk1975) +…

+ year fixed effects

+ country k fixed effects + group j fixed effects

+ jt

Zjt, Zjt-1, … are current and lagged economic conditions in origin country k

Interaction with initial fraction in group j Fjk1975 allows effect of shock to be larger for groups with higher initial presence

Construct predicted fraction foreign born, Fhatjkt, for each origin country k

Main concern: first stage may be too weak

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