Immigration, Housing Rents, and Residential Segregation: Evidence from Syrian Refugees in Turkey

This paper examines the short-term impact of Syrian refugee inflows on the housing market in Turkey. The unexpected influx of large numbers of Syrian refugees is used to construct a quasi-experimental design (the first wave of refugees, arriving between January 2012 and mid-2014, were clustered in some provinces, with no refugees in the rest of the country). Since the housing supply cannot respond in the short-term, the refugee influx resembled a positive demand shock to the housing market. And, since the average Syrian refugee in Turkey is younger and less skilled than the average native, the authors argue that refugees mostly seek low-cost, temporary accommodation. The authors find that refugee inflows led to a 2-5 percent increase in housing rents, almost entirely for high quality housing units. There is no statistically significant effect on the rents of lower quality units. This finding supports a residential segregation story, which suggests that natives seek native-predominant neighborhoods with better amenities in response to the influx of refugees. The authors suggest that this result may be generated by negative attitudes towards refugees, arising from decreased labor market opportunities, congested public services, and increased psychological distress.