Is It Merely a Labor Supply Shock? Impacts of Syrian Migrants on Local Economies in Turkey

Doruk Cengiz and Hasan Tekgüç

ILR Review, Volume 75, Issue 3 (2021)

https://doi.org/10.1177/0019793920978365

Review

Over 2.5 million Syrian refugees arrived in Turkey between 2012 and 2015, the majority settling in regions bordering Syria. This paper examines the effect of Syrian refugees on labor market outcomes for native workers in Turkey. In addition to the supply-side shock in the labor market, the authors investigate demand-side channels that might enable local economies to fully or partially absorb the labor supply shock, including: (a) native-migrant complementarity; (b) housing demand; and (c) increased entrepreneurial activities of Syrians and non-Syrians in host regions.

Most Syrian refugees do not have a high school degree and are not Turkish language speakers. Few Syrian refugees have work permits, but they can and do work in the informal sector, where they compete with low-skilled Turkish workers.

The authors exploit geographical variations of Syrian refugee flows, comparing labor market outcomes in host and non-host regions, before and after the arrival of Syrian refugees. The analysis is based on: (1) employment and wage data from the TurkStat Household Labor Force Survey (HLFS) from 2004 to 2015; (2) data on the number of Syrian refugees from the Ministry of Interior Directory General of Migration Management; (3) province-level new residential building permits data from TurkStat; and (4) province-level data on new firm establishments from the Union of Chambers and Commodity Exchanges of Turkey (TOBB).

Main results:

  • Inflows of Syrian refugees did not affect the employment or wages of Turkish workers at the same skill level. Native workers with less than a high school diploma experienced small wage and employment changes statistically indistinguishable from zero.
  • Wages of the relatively higher-skilled native workers have increased due to the Syrian migration.
  • The entry of Syrian refugees into the lower-skilled informal labor market in host regions caused low-skilled native workers to move into formal jobs. The share of formally employed native workers with less than a high school diploma increased rapidly starting in 2013. Compared to the counterfactual case in which no migration occurs, 2.5 percentage points more native workers in the host regions are earning at or above the minimum wage.
  • Syrian migrants and high-skilled native workers are complementary, but migration does not have any effect on very high-skilled workers. Inflows of Syrian refugees increased the share of workers earning upper-middle income; the shares of workers earning at or above 200 percent and 250 percent of the minimum wage increased by more than 2 percentage points, respectively. However, Syrian migration had almost no effect on very high-wage workers in refugee-hosting regions.
  • There was a sizeable positive effect of Syrian refugee inflows on residential building construction permits. The estimates suggest an increase larger than 34 percent.
  • The number of new firms with at least one Syrian cofounder increased between 2010 and 2015. The share was less than 2.3 percent in 2011 and 2010, increasing to more than 31.9 percent in 2015.
  • It is not only the Syrians who founded new firms in the host regions. Excluding all firms with at least one Syrian cofounder, there was still a sizable increase of approximately 10 percent, suggesting that non-Syrian entrepreneurs also benefited from the Syrian migration.

The authors conclude that, overall, Syrian refugees have had positive effects on native workers. Native lower-skilled workers experienced negligible wage and employment losses, while higher-skilled workers have seen gains. Native-migrant labor complementarity, increase housing demand, and increased entrepreneurial activities in the host regions have mitigated any adverse effects of an expansion of the labor supply due to inflows of Syrian refugees.

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