The paper examines the impact of internal displacement in Colombia between 1998 and 2005 on wages in destination municipalities. The analysis suggests that influxes of IDPs lead to a short-run negative impact on wages, i.e. a one percent increase in population due to internal displacement leads to an overall reduction in wages of 1.4 percent in the short-run. The author examines the wage effects by skill level and by gender, and finds that the decrease in wages is more pronounced for women, i.e. a one percent increase in population due to internal displacement decreases wages for low-skilled women by 2.2 percent, and for high-skilled women by 1.7 percent. The analysis shows that in the long run (over five years) there is no overall impact on wages, probably due to labor reallocation in receiving municipalities, i.e. following inflows of IDPs there is an increase in outmigration of local residents. However, the negative impact on wages persists for low-skilled women, who are less mobile, coupled with the fact that IDP women adapt well to new labor markets.
