This paper investigates the causal effect of the influx of Syrian refugees on the Turkish labor market. The analysis is based on demographic and labor market data from the Turkish Household Labor Force Survey (HLFS) from 2010 to 2015 (inclusive), together with data on the regional distribution of Syrian refugees in Turkey. The authors select five refugee-hosting regions close to the Syrian border with the highest refugee-to-population ratio as treatment regions and four comparable regions with a low refugee-to-population ratio as control regions. Using a difference-in-differences approach the authors analyze the effects of Syrian refugees on labor force participation, unemployment, informal employment, and formal employment (employed individuals are classified as being in formal employment if they were registered with the social security).
Key findings:
- Overall, labor force participation decreased and unemployment increased for the total sample after the influx of Syrian refugees.
- Syrian refugees reduced the likelihood of Turks having an informal job in the treatment regions compared with the control regions. Informal Turkish workers in the refugee-hosting regions were 3.9 percent more likely to leave their job than workers in regions that did not widely host refugees.
- The influx affected Turks heterogeneously, by gender, age, and level of education, with more pronounced adverse effects among female, older and less-educated workers. Female, older and less educated workers were more likely to leave the labor force, while male, younger and more educated workers were more likely to stay in the labor force and become unemployed. The authors surmise that: Syrian refugees may have competed especially with female and less-educated Turks for informal jobs; socio-cultural barriers in the Turkish society may have prompted females to withdraw from the labor market after the Syrian refugee shock; and older workers may have withdrawn from the labor market because employers prefer young refugees to older Turks in the informal, physical, labor-intensive sector.
- Negative impacts on labor market outcomes became larger in 2014–2015 compared with 2012–2013. The negative impact on the likelihood of Turks having an informal job doubled in 2014–2015 compared with the impact in 2012–2013. The probability of being unemployed also more than doubled in 2014–2015. The authors suggest that the rapid increase in the number of refugees since 2014 may explain the larger impacts in 2014–2015 than in 2012–2013.
The authors argue that since refugees have displaced Turkish informal-sector workers, and since social security programs do not cover informal workers, their living conditions are likely to worsen. They recommend that the government increase efforts to include informal workers in social programs, such as unemployment benefits, job training, and matching to potential employers.