This article examines how inflows of Syrian refugees affected labor market outcomes, consumer prices, and housing rents in Turkey. At the time the paper was written, Turkey was hosting 2.2 million Syrian refugees.
The author compares the pre- and post- immigration outcomes in the “treatment region” (the five subregions with high immigrant concentration) with those in the control region (four subregions where there has been hardly any immigration or none at all). The pre-immigration period is 2010–2011, and the post- immigration period is 2012–2013. The analysis is based on several data sources published by the Turkish Statistical Institute (TurkStat), including: (1) the Labor Force Survey covering social and demographic characteristics and labor market outcomes; (2) an item-level dataset of consumer prices; and (3) the Income and Living Conditions Survey detailing housing rents.
Main results:
- Syrian refugee inflows led to a small decline in employment of native workers, concentrated in the informal sector. Overall, the employment to population ratio declined by 1.8 percentage points in the treatment region compared to the control region. The decline was larger in the informal sector (2.3 percentage points) than in the formal sector (0.5 percentage points).
- More than half of those who lost their jobs exited the labor force. The unemployment to population ratio increased by 0.8 percentage points, while the labor force participation declined by 1 percentage point. In other words, around 43 percent of those who lost their jobs stayed unemployed, while the remaining 57 percent left the labor force. Men tended to stay unemployed, while females tended to leave the labor force.
- Wage earnings of native workers were not affected by refugee inflows. Wages in both the formal and informal sectors were unchanged.
- Overall, consumer prices declined by 2.5 percent due to refugee inflows, concentrated in informal labor-intensive sectors. The decline in prices in the informal labor-intensive sectors was around four percent, while the impact of refugee inflows on prices was almost zero in formal labor-intensive sectors.
- Rental prices increased, especially for high-quality housing. Refugee inflows generated a 5.5 percent increase in housing rents. Rental prices for lower-quality housing increased by 1.7 percent.
The authors draws three main conclusions: (1) the large size of the informal sector in Turkey coupled with the lack of work permit arrangements for refugees magnified the negative effect of Syrian refugee inflows on natives’ labor market outcomes; (2) the increase in the supply of informal immigrant workers generated labor cost advantages in informal labor-intensive sectors, which led to a reduction in the prices of goods and services produced by these sectors; and (3) Syrian refugees mostly sought low-cost rental housing which pushed natives living in low-cost neighborhoods toward higher-quality residential areas, thereby increasing rental prices for high-quality housing.