This paper estimates the effects of the Syrian refugee influx on the labor market outcomes of natives in Turkey. The authors use data from the end of 2015, when there were 2.5 million registered Syrian refugees in Turkey, almost all of whom were working in the informal sector. Syrian refugees in Turkey are, on average, younger and less educated than natives.
The authors exploit the variation in the ratio of Syrian refugees to natives across Turkish regions to isolate the effect of Syrian refugee inflows on labor market outcomes of natives. The analysis draws on several datasets including: (1) demographic characteristics and labor market outcomes from the 2004-2015 Turkish household labor force surveys (THLFS); (2) numbers of Syrians across the 81 provinces of Turkey from 2013 to 2015 from several sources; (3) regional data on trade activity from TurkStat; (4) data on regional consumer price indices for 2003-15 from the Central Bank of Turkey; (5) data on the openings, closings, and liquidation of firms, business cooperatives, and self-proprietorships from the Union of Chambers and Commodity Exchanges of Turkey for 2009-15; and (6) data on internal migration across regions for the 2008-15 period from TurkStat.
Main findings:
- Syrian refugees do not affect the overall employment of native men and have a positive effect on their average wages. There is suggestive evidence of a reduction in men’s wage employment, which is compensated by a rise in their self-employment and unpaid family work, that is, there is a transition from wage employment to self-employment and unpaid family work for men.
- Employment of native women is adversely affected, but there are no adverse effects of the Syrian refugee influx on average wages for native women. Total employment of native women falls, mainly because native women do not benefit from increased employment opportunities in the formal sector. Declines in women’s total employment is concentrated in agriculture and services, and is more pronounced among less educated and older women. Wage employment of native women also falls, mainly because self-employment and unpaid family work do not make up for a reduction in wage employment (unlike for men). The impact on women’s part-time employment is particularly adverse. Most women who lose their jobs leave the labor force, and there is no observed increase in unemployment.
- In the informal sector, men’s total employment and wage employment fall substantially—particularly in construction, agriculture, and manufacturing. In the informal sector, every 10 Syrians displace six native men (including part-time jobs), all of whom are wage workers.
- Negative effects of Syrian refugees on employment and wages in the informal sector affects some groups more than others. Adverse effects are more pronounced for temporary wage workers, less educated and young workers, women who are part-time employed and self-employed, and workers in agriculture and construction. Syrian refugees have a particularly strong displacement effect on temporary wage workers, many of whom are seasonal migrant workers from other regions, particularly in agriculture and construction. The substitutability between native and migrant workers in the informal sector decreases with rising levels of education and with age for natives. There isn’t any evidence that regional migration flows of less-educated natives, who are likely to work in the informal sector, contribute to the substantial decline in men’s informal employment.
- Men’s employment increases in the formal sector, offsetting the drop in informal employment. Both wage employment and wages of men in the formal sector increased following the influx of Syrian refugees. This effect largely stems from wage employment in the manufacturing sector and self-employment in the services sector. Every 10 Syrians generate jobs for about 6 native men, of whom roughly 3.5 are wage workers, about 2 are self-employed, and 0.4 are unpaid family workers. Additionally, men’s full-time employment rose, while part-time employment fell. Increases in wages in the formal sector are more pronounced for non-college-educated, younger (below 40), and full-time male workers.
- Increases in consumer prices and capital flow to the treatment regions contribute to the rise in labor demand in the formal sector. There is evidence for a rise in consumer prices, as migrants increase the consumption base more than the production base. An increase in capital investment in refugee-hosting regions also occurs, as the productivity of capital in these regions increases with the massive labor supply shock. Furthermore, the internal migration of college-educated natives to refugee-hosting areas contributes to the increase in employment and wages in the formal sector.
Overall, inflows of Syrian refugees have no effect on the employment of native men, as the positive effect on formal employment offsets the negative effect on informal employment. For native women, however, overall employment falls, particularly for less educated and older female workers. The analysis also reveals increases in consumer prices and capital investments in refugee-hosting regions. The authors conclude that the adverse effects on the most vulnerable groups in the labor market, along with the rise in consumer prices, imply that poverty might increase among more vulnerable native groups.